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Committee tables bill that would require hospitals to apply for real‑property tax exemptions
Summary
The House Taxation & Revenue Committee tabled House Bill 46, a sponsor‑backed committee substitute that would clarify that real property financed through hospital equipment loan bonds is not automatically exempt from property tax and that hospitals must apply for a charitable‑use exemption.
House Bill 46, a committee substitute that would clarify how real property financed with hospital equipment loan bonds is treated for property tax purposes, was tabled by the House Taxation & Revenue Committee after extended debate and questions from members.
The substitute would define “real property” in Section 7‑36‑3 and state that real property built with bonds under the hospital equipment loan program would not automatically be abated from property taxes, according to Damian Lara, vice chair of the New Mexico Assessors Affiliate. "Real property, built with those bonds and financing would not be abated from property taxes," Lara told the committee.
The bill’s sponsor, Representative Chavez, introduced the committee substitute and deferred to expert witnesses for technical explanation. Opponents, including Jason Weeks, a registered lobbyist for the New Mexico Hospital Association, and Kevin Noel, tax director for Presbyterian Healthcare Services, said the change would remove established exemptions and discourage construction or remodeling of health facilities.
"We do stand in opposition of this bill," Jason Weeks said. He argued that "real property used for charitable purposes in New Mexico is exempt from property tax under the New Mexico state constitution" and that hospitals rely on that exemption to reinvest in services. Kevin Noel said the substitute would add "multimillion dollar, additional tax expense" beginning this year and described the change as inequitable compared with industrial revenue bonds that continue to allow tax advantages for for‑profit entities.
Supporters represented by Lara said the substitute is intended as cleanup language to ensure that financing real property with health bond proceeds does not create an automatic exemption. He cited examples where counties have exercised discretion: San Juan Regional’s main hospital is county‑owned and therefore automatically exempt, while certain parking lots and vacant lots have been assessed and taxed. Lara told members that San Juan Regional had 33 accounts historically assessed at about $15,300,000 and 13 vacant lots assessed at about $665,000 (figures provided in testimony) as examples of assets that had been taxed in some cases.
Committee members pressed on practical effects for rural hospitals. Representative Lundstrom raised the example of Rehoboth McKinley Christian Hospital and asked whether the bill would affect refinancing of a dialysis unit; Lara replied that the bill targets real property only and would not affect equipment such as dialysis machines. Lara also said hospitals that believe they provide a substantial public benefit may apply for a charitable‑use exemption; if a county assessor denies the exemption, applicants may protest to the county protest board and seek judicial review.
Several members expressed concern about the bill’s necessity and timing. Representative Montoya said litigation involving a contested parking‑garage exemption in Bernalillo County made him reluctant to legislate while a court case is pending. Representative Chandler said she would not support a bill that requires hospitals to justify exemptions and called the proposal unnecessary. Representative Montoya moved to table the bill; Representative Hernandez seconded the motion. The committee voted to table the committee substitute; the chair announced the bill was tabled.
The measure drew sustained questioning about constitutional issues, including an exchange referencing Article VIII, Section 3 of the New Mexico Constitution and a 2017 court decision cited in committee testimony. A witness and county assessors argued the statute as written conflicts with the constitution when it is read to create automatic exemptions based solely on bond financing rather than on the charitable use of property.
With the bill tabled, committee members and stakeholders indicated further work and clarification would be needed before any future action.
Votes at a glance: The committee recorded a motion to table House Bill 46 (committee substitute). The motion carried and the chair announced the bill was tabled. The transcript includes a roll call in which the chair recorded affirmative responses; the committee did not adopt the committee substitute.
