The House of Representatives is set to vote on Thursday on a sweeping tax plan that would affect non-profit hospitals and public hospital districts and the patients they serve. As we noted in a November 7 Inside D.C., the most concerning provisions of the Tax Cuts & Jobs Act would:
- Eliminate the tax exemption for private-activity bonds, including qualified 501(c)(3) hospital bonds beginning January 1, 2018 (affects only 501(c)(3) hospitals); and
- Eliminate the ability to issue new tax-exempt bonds after December 31, 2017 to advance refund existing tax-exempt bonds (affects all hospitals).
Please contact your member of the House of Representatives today and urge him or her to publicly state support for protecting the tax-exempt status of private-activity bonds and advance refundings by urging that these provisions be struck in conference with the Senate. (Due to House rules, the provisions cannot be struck on the House floor and must be addressed in conference.) We recommend sending your message to the Health Legislative Assistant and Legislative Director.
The State of Play. The House Ways and Means Committee last week voted 24 to 16 along party lines to send the bill to the House floor. Rep. Reichert voted for the measure and Rep. DelBene voted against it. Rep. DelBene also offered an amendment to remove the tax-exempt bond language from the bill.
This week in the Senate, the Finance Committee will consider its version of a tax bill. As introduced, elimination of the tax exemption for private activity bonds is not included. However, elimination of the tax exemption for advanced refunding is part of their bill. The committee is expected to finish its work Thursday. Senate floor action is expected the week after Thanksgiving.
Yesterday, WSHA sent a letter to our state’s representatives urging their support of tax-exempt private activity and advance refunding bonds.
- We support the WSHA request to publicly support high-quality, lower-cost health care by publicly urging restoration of tax-exempt private activity and advance refunding bonds in conference negotiations with the Senate.
- Tax-exempt bonds play a critical role in helping non-profit hospitals and public hospital districts access low-cost capital to continue to serve the health needs of their communities.
- Tax-exempt bonds reduce hospitals’ borrowing costs because they can be sold at a lower interest rate than can taxable debt. Lower borrowing costs translate into lower health care costs for patients.
- The lower cost of tax-exempt financing also makes possible necessary upgrades and modernizations that would not otherwise be possible. This enables us to more efficiently fulfill our mission and focus on our work to deliver critical health services for our community.
- In the absence of tax-exempt bonds, local and state governments would otherwise be called upon to provide these necessary services at taxpayer expense.
- Advance refunding bonds are an important tool that allows hospitals to refinance their debt when interest rates fall. They have resulted in huge savings for the health care system.