Senate committee advances bill creating tax credits to aid rural hospitals, adds 10% local match

The Senate Finance and Taxation Committee gave House Bill 86, known in committee as the Rural Hospital Investment Act, a favorable report after adopting two amendments that prioritize aid to the most needy rural hospitals and require a local match, sponsors and committee members said.

The bill, carried to the committee by Representative Collins, would create tax credits to help rural hospitals raise private support. "It is a $20,000,000 limit. Each hospital has the first year, a $750,000 limit," Representative Collins told the committee. The credits could be applied against a mix of taxes that hospitals pay, including certain sales, insurance premium and utility taxes, and third parties could contribute through the credit process.

Committee members said the bill also requires each participating hospital to submit a five-year plan that demonstrates a path to financial sustainability and places review of those plans with a board of business representatives. Collins said the board is intended to verify that plans are realistic and that projects will help the hospitals continue to provide needed services locally.

An amendment described in committee as a "priority" amendment uses a definition adapted from a Georgia model to favor communities with the highest demonstrated need. A second amendment lowered the local-match requirement to 10 percent, with up to half of that match allowed in in-kind services. "We've lowered the amount of match to 10%, and up to half of that could be in kind services as well," Representative Collins said during committee questioning.

Senators debated whether some rural communities could meet the match, and Collins answered that the bill permits in-kind contributions — for example, county maintenance or donated services — and allows hospitals to pursue grants and other fundraising to meet the requirement. Committee discussion also noted the grant-size math: a $750,000 first-year credit would carry a $75,000 cash match or as little as $37,500 if half of the match were in-kind.

The committee adopted the amendments by roll call and then gave the bill a favorable committee report. The committee recorded the vote on the amendments and the bill as 15 ayes, 0 nays for each recorded roll call, and the bill now moves to the full Senate for further consideration.

Clarifying details discussed in committee include: a $20 million statewide cap on credits; a $750,000 first-year per-hospital limit; required five-year sustainability plans reviewed by a business-board; a 10% local match with up to half permitted as in-kind; and third-party contributions through the tax-credit mechanism.

The committee did not adopt statutory text changes beyond the two amendments discussed; committee members asked sponsors to continue refining definitions and implementation details as the bill moves forward.