As Tacoma City Council struggles to fill a budget gap that could be as high as $31 million, a number of ideas to increase revenue have been considered. One is to eliminate the exemption for non-profit health care providers in paying the city business and occupation (B&O) tax. Representatives of the organizations that operate major hospitals and from smaller organizations made it clear they strongly oppose the proposal, based on testimony they gave during the Dec. 21 meeting of the council’s Government Performance and Finance Committee.
Several employees of Franciscan Health System, which operates Saint Joseph Medical Center, and MultiCare Health System, which operates Tacoma General, Mary Bridge Children’s and Allenmore hospitals, discussed why they want the exemption to stay in place.
Dianna Kielian, senior vice president of mission for Franciscan, said her employer already pays a lot in city, state and federal taxes.
She noted a desire by city leaders to use the “Medical Mile” – the stretch of Hilltop from Tacoma General to St. Joe’s – as an economic development tool to boost investment and employment in health care. Eliminating the B&O tax exemption would hurt such efforts, Kielian told council members.
She also noted the large amount of charity care Franciscan performs for the poor. Imposing the B&O tax “would hinder our ability to provide care,” she remarked.
Jackie Ostrom is executive director of Carol Milgard Breast Center, which she noted is a joint venture with Franciscan and MultiCare as partners. She said many of the women with breast cancer served by the center live in low-income areas and are minorities. Many are working and earn just enough to not qualify for Medicaid.
Lois Bernstein, senior vice president of community services with MultiCare, said the exemption exists because of the large amount of charity care provided by the hospitals in the city. She mentioned several of the unique services MultiCare provides and contributes money to, including a sobering center for street alcoholics and assistance to victims of sexual assault.
The recession is impacting MultiCare, she noted. Bernstein said the organization has eliminated 561 jobs and froze executive salaries.
“We are already the provider of last resort in this community,” said Tricia Sinek, manager of Franciscan’s Community Cancer Program. “If this exemption is removed, we will lose health care jobs.”
Brian Haynes, president of the Board of Directors of Tacoma/Pierce County Chamber of Commerce, said the major hospitals already pay a lot in other types of taxes. He urged the council not to remove the B&O tax exemption.
Gregory Kleiner of Sea Mar Community Health Centers said his organization lost $10 million in state funding in the past year. It cannot afford to pay the B&O tax, he said to council members. “We cannot afford to take another hit.”
Councilmember Spiro Manthou, attending his last meeting before leaving office, made a point to tell his colleagues he opposed eliminating this exemption. He said the hospitals and other non-profit organizations play a vital role in funding and providing a public safety net.
“This is a bad idea,” Manthou said. “If we move forward with this, we will get bit in the end.”