SB223INTRODUCED
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SB223
QDDR541-1
By Senator Weaver
RFD: Finance and Taxation Education
First Read: 19-Mar-24
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5 QDDR541-1 03/07/2024 KHF (F)KHF 2024-1088
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First Read: 19-Mar-24
SYNOPSIS:
This bill would set up a Rural Hospital
Investment Program to function as an institutional
conduit for financial support from the public for rural
hospitals in the State of Alabama.
This bill would incentivize donations to rural
hospitals by creating a tax credit for individuals and
entities to offset their state income tax liability.
Qualifying Hospitals would use the gifts to pay for
their provision of acute care services to rural
populations served by the hospitals. These funds may be
used not only for direct care and operational expenses
but may include expenditures to maintain or upgrade
facilities.
This bill would establish a board within the
Office of State Treasurer to determine the eligibility
of qualifying rural hospitals to receive donations
qualifying for the tax credit and to operate the
program with the support of the Department of Revenue.
A BILL
TO BE ENTITLED
AN ACT
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Relating to rural healthcare; to provide for funding of
rural general acute care, critical access, and rural emergency
hospitals by creating the Rural Hospital Investment Program;
to establish the Rural Hospital Investment Program Board to
administer the program; to provide for a state income tax
credit in exchange for donations to rural general acute care,
critical access, and rural emergency hospitals; and to provide
for coordination with the Department of Revenue.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. This act, the purpose of which is to
generate additional funds for eligible rural general acute
care, critical access, and rural emergency hospitals to
strengthen their financial viability, shall be known and may
be cited as the "Rural Hospital Investment Act of 2024."
Section 2. For the purposes of this act, the following
terms have the following meanings:
(1) BOARD. The Rural Hospital Investment Program Board.
(2) DEPARTMENT. The Alabama Department of Revenue.
(3) ELIGIBLE RURAL HOSPITAL. A hospital that meets the
requirements as set out in Section 4 of this act.
(4) INCOME TAX LIABILITY. The amount of tax levied on
an individual's income for the tax year pursuant to Section
40-18-2, Code of Alabama 1975 and to any entity the amount of
tax levied on a taxpayer's income for the tax year pursuant to
Chapter 16 or Chapter 18 of Title 40, Code of Alabama, 1975.
(5) PROGRAM. The Rural Hospital Investment Program.
(6) QUALIFIED DONATION. An unrestricted transfer of
funds from a qualified donor to an eligible rural hospital.
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funds from a qualified donor to an eligible rural hospital.
(7) QUALIFIED DONOR. Any person that makes a qualified
donation to an eligible rural hospital.
(8) RURAL HOSPITAL. A rural general acute care, rural
emergency, or critical access hospital determined to be
located in a rural area as set out in Section 4(2) of this
act.
(9) TAX YEAR. The calendar year for which annual income
is reported to the State of Alabama by a person that makes a
qualified donation.
Section 3. (a) The Rural Hospital Investment Program
Board is established within the Office of the State Treasurer
to oversee the development and operation of the Rural Hospital
Investment Program. The board shall consist of the following
members:
(1) The Governor, or his or her designee.
(2) The State Treasurer, or his or her designee.
(3) The Commissioner of Revenue, or his or her
designee.
(4) The Senate President Pro Tempore, or his or her
designee.
(5) The Speaker of the House of Representatives, or his
or her designee.
(6) Two representatives of the Alabama Hospital
Association, appointed by the association.
(b) Members shall be appointed within 30 days of the
effective date of this act.
(c)(1) The Alabama Hospital Association shall appoint
one initial member to the board for a term of two years and
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one initial member to the board for a term of two years and
one initial member to the board for a term of four years.
(2) A member subsequently appointed to the board by the
Alabama Hospital Association shall serve for a term of four
years.
(3) A vacancy on the board of a representative of the
Alabama Hospital Association shall be filled by the Alabama
Hospital Association before the next scheduled meeting of the
board and the appointee shall serve for the remainder of the
unexpired term.
(d) Designees or appointees to the board shall be
inclusive and reflect the racial, gender, geographic, rural,
and economic diversity of the state.
(e)(1) No later than three months after the effective
date of this act the Governor shall call the first meeting of
the board, at which the members shall elect a chair.
(2) The board shall meet at least once a year in
Montgomery, Alabama, but thereafter shall meet as necessary to
conduct its business.
(3) A quorum for a meeting of the board shall be four
members.
(4) The board may meet by electronic means, so long as
there is a quorum of participating members.
(5) The legislative members of the board shall be
entitled to their legislative compensation, per diem, and
travel expenses for each day they attend a meeting of the
board pursuant to Section 49 of the Constitution of Alabama of
2022.
(6) The non-legislative members of the board shall
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(6) The non-legislative members of the board shall
serve without compensation but may be reimbursed for necessary
expenses in attending meetings of the board pursuant to the
policies of his or her respective designating or appointing
authority.
Section 4. In order to receive qualified donations as
an eligible rural hospital under the program, a health care
institution shall meet all of the following requirements:
(1) Be a rural general acute care hospital, a rural
emergency hospital, or a critical access hospital licensed by
the Alabama Department of Public Health pursuant to Section
22-21-22, Code of Alabama 1975.
(2) Be in a location considered to be a rural area
under the federal Centers for Medicare & Medicaid Services
eligibility definition of "rural" as verified through the
Rural Health Information website supported by the federal
Health Resources and Services Administration.
(3) Provide hospital services to both Medicaid and
Medicare participants without discrimination.
(4) Provide hospital services to indigent patients,
regardless of ability to pay.
(5) Be in compliance with all reports and audits
required by law.
(6) Submit to the board a written five-year plan that
describes the financial viability and stability of the
hospital, with a plan detailing how it would use qualified
donations under the program and update the written plan five
years after the initial plan is submitted and every five years
thereafter.
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thereafter.
Section 5. No later than November 1 of each year, the
board shall determine that a hospital is an eligible rural
hospital pursuant to Section 4 and shall do both of the
following:
(1) No later than December 1 of each year submit the
list of eligible rural hospitals to the Alabama Department of
Revenue.
(2) No later than December 31 of each year publish on
its website or on the department website a list of rural
hospitals eligible to receive qualified donations during the
next tax year.
Section 6. (a) An eligible rural hospital shall only
use qualified donations for the purpose of providing health
care to the residents of the area which it serves, which may
include not only operational expenditures, but also
expenditures for maintenance, capital upgrades, and
improvements.
(b) An eligible rural hospital may retain a person to
solicit or manage the qualified donations it receives for a
percentage fee of the qualified donations solicited or
managed, but total fees shall not exceed five percent of the
total amount of qualified donations received during a calendar
year.
(c) An eligible rural hospital shall file with the
board, no later than March 1 of each year, a report on a form
to be developed by the board that shall include all of the
following information:
(1) A schedule of each qualifying donation received
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(1) A schedule of each qualifying donation received
during the preceding tax year which includes the amount,
identifies the qualified donor, and describes how the
qualified donation was or is planned to be spent.
(2) A schedule of payments made to any person during
the preceding tax year for the purpose of soliciting or
managing the qualified donations received.
Section 7. No later than the fourth quarter of each
calendar year, the board and the department shall prepare
jointly a report that at a minimum shall include all qualified
donations reported by eligible rural hospitals and all tax
credits claimed and approved for the preceding tax year, to be
provided to the Legislature no later than the fifth day of its
next regular session.
Section 8. (a) A taxpayer shall be allowed a tax credit
to offset income tax liability for each qualified donation.
The tax credit shall be provided as follows:
(1) In the case of a qualified donor who is a single
individual, a head of household, or married filing a separate
return, 100 percent of the amount donated in the initial tax
year and in each taxable year thereafter, with a contribution
limit each tax year of fifteen thousand dollars ($15,000).
(2) In the case of qualified donors who are married,
filing a joint return, 100 percent of the amount donated in
the initial tax year and in each tax year thereafter, with a
contribution limit each tax year of thirty thousand dollars
($30,000).
(3)a. In the case of a qualified donor that is taxed as
a pass-through entity under subchapters S or K of the Internal
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a pass-through entity under subchapters S or K of the Internal
Revenue Code, a limited liability company, or a professional
corporation, a contribution limit each tax year of four
hundred fifty thousand dollars ($450,000).
b. The tax credit shall be taken by the taxpayer on a
pro rata basis according to an individual's percentage of
ownership in the entity or fifteen thousand dollars ($15,000),
whichever is less. In the case of a qualified donor that is
taxed as a corporation under subchapter C of the Internal
Revenue Code, an amount each tax year not to exceed the amount
donated or 75 percent of the corporation's income tax
liability, whichever is less, with a contribution limit each
tax year of five hundred thousand dollars ($500,000).
(c)(1) In no event shall the total amount of the tax
credit for a given tax year exceed the taxpayer's income tax
liability, or, for financial institutions, the state portion
of the taxpayer's income tax liability.
(2) Any unused tax credit may be carried forward for up
to three years following the qualified donation but shall not
be refundable or transferable.
(d) The income tax credit shall be effective January 1,
2025, for the 2025 tax year.
Section 9. (a) The statewide annual aggregate of the
tax credit allowed for qualified donations shall not exceed
the following amounts:
(1) Thirty-eight million dollars ($38,000,000) in the
fiscal year ending September 30, 2025.
(2) Sixty million dollars ($60,000,000) in the fiscal
year ending September 30, 2026.
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year ending September 30, 2026.
(3) Eighty million dollars ($80,000,000) in the fiscal
year ending September 30, 2027, and for each fiscal year of
the State of Alabama thereafter.
(b) No more than two million dollars ($2,000,000) shall
be contributed to any eligible rural hospital in any tax year,
to be limited by the annual aggregate amount applicable in
subsection (a).
(c) The department shall preapprove each qualified
donation for compliance with each applicable limit in
subsections (a) and (b).
Section 10. (a) The department shall adopt rules
pursuant to the Alabama Administrative Procedure Act necessary
to carry out the board's obligations and implement and
administer the tax credit as set out in this act.
(b) The board may retain an Alabama company to
publicize the program, including the development of
promotional and informational literature and a program website
for use by eligible rural hospitals and qualified donors.
Section 11. The state income tax credit created by this
act may also qualify for federal income tax credits or
deductions, but it is not intended for any qualified donation
under this act to automatically qualify for any federal income
tax credit or deduction.
Section 12. This act shall become effective on October
1, 2024.
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