Bill would tie hospital property tax exemptions to active health-care use; hospitals offer refinements

Representative Smolts told the Ways and Means Committee that House Bill 13-84 would clarify that property owned by large nonprofit hospital systems is tax-exempt only when it is actively used in connection with providing health-care services; ownership alone would not guarantee exemption. The bill provides a 10-year runway for existing holdings and excludes critical access and county hospitals.

Smolts argued the change is targeted at large systems that may acquire and hold land without current medical use, which shifts tax burdens onto homeowners and local governments. He cited a fiscal 'fair-share' gap in the hundreds of millions (figures of about $716M–$760M were mentioned during questioning) and said parcel-level transparency is limited by consolidated nonprofit filings.

Advocacy groups and local governments testified in favor of the bill’s objectives. Matt Bell (Hoosiers for Affordable Health Care/Catalyst Public Affairs) highlighted competition concerns where hospital systems 'land bank' property; David Baderoff (Association of Indiana Counties), Isabel Elliot (Indiana Association of Cities & Towns), and others supported clearer, locally administered determinations. Luke McNamee of the Indiana Hospital Association said hospitals would engage cooperatively, recommended language tweaks to clarify definitions of active use and transition timelines, and shared research indicating hospitals deliver substantial community benefits (the association cited an independent study it will share).

Committee members pressed for more parcel-level data and asked for the sponsor’s sources for the aggregated fiscal-gap figures; the sponsor said he would provide detailed sources. The bill was discussed but not voted on during the hearing.