Hospital Taxes

REVENUE ESTIMATING CONFERENCE
Tax: Ad Valorem
Issue: Hospital Taxes
Bill Number(s): HB 7115 (linked to HB 7117 – Public Records/Capital Recovery Reports)
Entire Bill
Partial Bill:
Sponsor(s): Representative Fant
Month/Year Impact Begins: July 1, 2015
Date of Analysis: March 27, 2015
X
Section 1: Narrative
a. Current Law:
County Hospitals
Chapter 155, F.S., governs the processes by which county governments may create, fund, regulate and run county hospitals.
Section 155.25, F.S., authorizes boards of county commissioners in any county, except Okaloosa, to levy an ad valorem tax, not
to exceed 5 mills for no more than 15 consecutive years for the purpose of funding hospital capital expenditures. In addition, a
board of county commissioners may allocate to hospital funds any other public monies in its possession not otherwise
appropriated or allocated to other uses, pursuant to s. 155.24, F.S.
According to the most recent House Staff Analysis (i.e., PCB FTC 15-02, dated 3/24/2015), there are four county-operated
hospital systems in Florida: Jackson Memorial in Miami-Dade County, Weems Memorial in Franklin County, Doctors’ Memorial
in Holmes County, and The Centers in Citrus and Marion counties. County governments may also appropriate funds to a
hospital, not owned or operated by the county, including privately-owned hospitals or hospitals owned by special districts.
Special Districts
Section 189.012(6), F.S., defines special district as a unit of local government created for a special purpose, as opposed to a
general purpose, which has jurisdiction to operate within a limited geographic boundary and is created by general law, special
act, local ordinance, or rule of the Governor and Cabinet. Special districts are units of local special-purpose government and are
very similar to municipalities and counties, which are units of local general-purpose government. All three are similar in that
they have a governing body with policy-making powers, provide essential governmental services and facilities, and operate in a
limited geographical area. However, the main difference is their purpose. Municipalities and counties provide local general
governmental services and have broad powers whereas special districts provide local specialized governmental services and
have very limited, related, and specific prescribed powers. As of March 25, 2015, there are 1,635 active special districts in
Florida, which provide more than 75 specialized governmental functions such as mosquito control, beach facilities, fire control
and rescue, drainage control, or hospital services.
For state and local financial reporting and other purposes, special districts are created as either dependent or independent.
Pursuant to s. 189.012(2), F.S., a dependent special district must meet at least one of the following criteria.
1.
2.
3.
4.
The membership of its governing body is identical to that of the governing body of a single county or a single municipality.
All members of its governing body are appointed by the governing body of a single county or a single municipality.
During their unexpired terms, members of the special district’s governing body are subject to removal at will by the
governing body of a single county or a single municipality.
The district has a budget that requires approval through an affirmative vote or can be vetoed by the governing body of a
single county or a single municipality.
Pursuant to s. 189.012(3), F.S., an independent special district is a special district that meets none of the above four criteria.
Hospital Districts
According to the Department of Economic Opportunity’s Special District Accountability Program – Official List of Special
Districts, there are 32 active hospital, health care, and county health and mental health care districts in Florida – as of March 25,
2015. Of the 32, 5 are dependent districts and 27 are independent districts.
Nineteen of the 32 active hospital, health care, and county health and mental health care districts in Florida are authorized to
levy ad valorem taxes. Of these 19 districts, one is dependent and 18 are independent.
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Page 1 of 4
REVENUE ESTIMATING CONFERENCE
Tax: Ad Valorem
Issue: Hospital Taxes
Bill Number(s): HB 7115 (linked to HB 7117 – Public Records/Capital Recovery Reports)
b.
Proposed Change: The bill creates s. 155.50, F.S., to set up a capital recovery process for tax-supported hospitals. The
Department of Financial Services shall contract with an approved provider to receive capital recovery reports and calculate the
denial rate for each hospital district or county hospital based on the submitted data. The bill defines a number of terms in order
to implement this new section. Each hospital district or county hospital must complete and submit to the contracted, approved
provider a capital recovery report within 90 calendar days after the end of the local fiscal year, which ends on September 30.
The first capital recovery report is due within 90 calendar days after the 2015-16 local fiscal year, which ends on September 30,
2016.
The bill defines a capital recovery report as a report of claims to an insurer or governmental entity and all related claim denials
for all of the claims of hospitals and other medical facility operations of a hospital district or a county hospital. A claim is defined
as an itemized statement of health care services or costs submitted by a health care provider or facility to a governmental entity
or a third party for payment. A hospital district is defined as a dependent or independent special district that levies ad valorem
taxes to support the operations of one or more hospitals or other medical facilities. A county hospital is defined as a hospital
receiving county funding.
Within 60 calendar days after receiving the completed capital recovery report, the contracted provider shall review the data
submitted in the report and shall calculate the hospital district’s or county hospital’s claims denial rate. A 15 business day
extension for corrective action shall be granted to a hospital district or county hospital that submits a report determined to be
incomplete. If a hospital district or county hospital fails to provide the completed report within the 15 day extension, the
hospital district or county hospital may not levy or receive increased tax revenues for the fiscal year following the year of the
report’s due date.
The bill conditions future increases in certain additional funding to an entity’s denial rate, based on the following criteria.
1.
2.
3.
A hospital district or county hospital may levy or receive increased tax revenues for the 2017-18, 2018-19 and 2019-20 fiscal
years only if the denial rate calculated from the capital recovery report in the immediately preceding fiscal year is 10
percent or less.
A hospital district or county hospital may levy or receive increased tax revenues after the 2019-20 fiscal year only if the
denial rate calculated from the capital recovery report in the immediately preceding fiscal year is 7 percent or less.
If the hospital district or county hospital fails to meet these denial rates, it may increase tax revenues if it can determine
that it reduced its claim denial rate by 33 percent within the preceding three fiscal years and by 66 percent within the
preceding five fiscal years.
The bill defines increased tax revenues as an increase in ad valorem tax revenues levied by a hospital district or an increase in
county funding for a county hospital for a fiscal year compared to the levying or funding entity’s immediately prior fiscal year.
County funding is defined as funds appropriated by a county government to support a hospital or the proceeds of an ad valorem
tax levied by a county to support a hospital.
Section 2: Description of Data and Sources
Florida Department of Economic Opportunity, Special District Accountability Program – Official List of Special Districts.
Florida Department of Revenue, Ad Valorem Tax data.
Florida House of Representatives, Finance & Tax Committee staff.
Section 3: Methodology (Include Assumptions and Attach Details)
County Hospitals
According to data contained in annual financial statements for the local fiscal year ended 2013, the four county-operated hospital
systems in Florida received approximately $360 million in funding from the county governments operating them. The majority of the
total statewide county funding (i.e., $349 million) was distributed to the Jackson Memorial system by Miami-Dade County. Of the
$349 million total funding by Miami-Dade County, approximately 62 percent (i.e., $216 million) reflected the proceeds the County
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REVENUE ESTIMATING CONFERENCE
Tax: Ad Valorem
Issue: Hospital Taxes
Bill Number(s): HB 7115 (linked to HB 7117 – Public Records/Capital Recovery Reports)
Public Hospital Surtax levied pursuant to s. 212.055(5), F.S. The remainder (i.e., $133 million) reflected transfers from the county’s
General Fund.
Hospital Districts
The Official List of Special Districts currently identifies 32 active hospital, health care, and county health and mental health care
districts in Florida, as listed below.
Active Hospital, Health Care, and County Health and Mental Health Care Districts in Florida
as of March 25, 2015
Ad Valorem
2014
2014
District Name
County
Status
Tax Funding?
Millage Rate
Taxes Levied
Baker County Hospital District
Baker
Independent
Yes
1.2000
$925,518
Bay Medical Center
Bay
Independent
No
Campbellton-Graceville Hospital
Jackson
Independent
Yes
1.6816
$324,375
Cape Canaveral Hospital District
Brevard
Independent
No
Carrabelle Hospital Tax District
Franklin
Dependent
No
Citrus County Hospital Board
Citrus
Independent
Yes
0.0000
$0
DeSoto County Hospital District
DeSoto
Independent
No
Doctors Memorial Hospital
Holmes
Independent
No
Gadsden County Hospital
Gadsden
Dependent
Yes
0.0000
$0
George E. Weems Memorial Hospital
Franklin
Independent
No
Halifax Hospital Medical Center
Volusia
Independent
Yes
1.0000
$13,149,276
Hardee County Indigent Health Care
Hardee
Independent
Yes
0.3780
$549,895
Special District
Health Care District of Palm Beach
Palm Beach
Independent
Yes
1.0800
$151,093,010
County
3.2908
$5,879,844
Hendry County Hospital Authority
Hendry
Independent
Yes
(debt) 0.6600
$1,179,256
Highlands County Hospital District
Highlands
Dependent
No
Hillsborough County Hospital Authority
Hillsborough
Dependent
No
Indian River County Hospital District
Indian River
Independent
Yes
0.9899
$13,343,029
Jackson County Hospital District
Jackson
Independent
No
Lake Shore Hospital Authority
Columbia
Independent
Yes
0.9620
$2,272,124
Lee Memorial Health System
Lee
Independent
No
Lower Florida Keys Hospital District
Monroe
Independent
Yes
0.0000
$0
Madison County Health and Hospital
Madison
Independent
Yes
0.0000
$0
District
Marion County Hospital District
Marion
Dependent
No
North Brevard County Hospital District
Brevard
Independent
No
North Broward Hospital District
Broward
Independent
Yes
1.5939
$155,674,416
North Lake County Hospital District
Lake
Independent
Yes
1.0000
$9,119,561
Sarasota County Public Hospital District
Sarasota
Independent
Yes
1.0863
$47,250,010
South Broward Hospital District
Broward
Independent
Yes
0.1863
$8,161,957
South Lake County Hospital District
Lake
Independent
Yes
0.7633
$4,969,106
Southeast Volusia Hospital District
Volusia
Independent
Yes
2.7842
$15,571,573
West Orange Healthcare District
Orange
Independent
No
West Volusia Hospital Authority
Volusia
Independent
Yes
1.9237
$14,079,446
Total
$443,542,396
Note: The Official List of Special Districts functionally identifies Bay Medical Center as both a Hospital district and a Health Care
district. The Health Care District of Palm Beach County, Lee Memorial Health System, West Orange Healthcare District, and West
Volusia Hospital Authority are functionally identified as Health Care districts. The Hardee County Indigent Health Care Special
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Page 3 of 4
REVENUE ESTIMATING CONFERENCE
Tax: Ad Valorem
Issue: Hospital Taxes
Bill Number(s): HB 7115 (linked to HB 7117 – Public Records/Capital Recovery Reports)
District is functionally identified as a County Health and Mental Health Care district. All other entities are functionally identified as
Hospital districts.
Source: Florida Department of Revenue.
The future ability of a hospital district or county hospital to levy or receive increased tax revenues is contingent on whether or not
the affected entities meet the bill’s specified denial rate requirements. For each county hospital that fails to meet the bill’s specified
denial rates, the county government would be prohibited from providing the hospital with increased appropriations or increased ad
valorem tax revenues. For each hospital district that fails to meet the bill’s specified denial rates, the district would be prohibited
from collecting increased ad valorem tax revenues for its hospitals and/or medical facilities. For these reasons, the EDR staff is
recommending a recurring positive indeterminate fiscal impact for each fiscal year in the forecast period.
Section 4: Proposed Fiscal Impact
High
Cash
Middle
Recurring
2015-16
2016-17
2017-18
2018-19
2019-20
Cash
$0
$0
(Indeterminate)
(Indeterminate)
(Indeterminate)
Low
Recurring
(Indeterminate)
(Indeterminate)
(Indeterminate)
(Indeterminate)
(Indeterminate)
Cash
Recurring
List of Affected Trust Funds: Local funds
Section 5: Consensus Estimate (Adopted: 03/27/2015): The Conference adopted a zero to negative indeterminate impact except
for the first two year’s cash, which is zero.
GR
2015-16
2016-17
2017-18
2018-19
2019-20
Cash
0.0
0.0
0.0
0.0
0.0
Trust
Recurring
0.0
0.0
0.0
0.0
0.0
Cash
0.0
0.0
0.0
0.0
0.0
Recurring
0.0
0.0
0.0
0.0
0.0
363
Local/Other
Cash
Recurring
0.0
0/(**)
0.0
0/(**)
0/(**)
0/(**)
0/(**)
0/(**)
0/(**)
0/(**)
Total
Cash
0.0
0.0
0/(**)
0/(**)
0/(**)
Recurring
0/(**)
0/(**)
0/(**)
0/(**)
0/(**)
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