Rep. Terri Collins’ proposal to create a dollar-for-dollar tax credit program allowing individuals and businesses to reduce their state tax liability by donating to rural hospitals stalled in a House committee on Wednesday.
As originally introduced earlier this session, Collins’ House Bill 310 would allow for credits against income tax liability and would have been capped at $80 million, Alabama Daily News previously reported. Income taxes support the Education Trust Fund.
In the House education budget committee on Wednesday morning, Collins said she had a substitute bill that would cap the fiscal impact to the state to $20 million the first year and expand the taxes businesses and individuals could apply their credits to, including utility and excise taxes. Revenue from those go into the state’s General Fund.
“Let’s get this bill through this year and see its impact,” Collins said in committee.
The bill is modeled after legislation in Georgia.
Danne Howard, deputy director of the Alabama Hospital Association, told Alabama Daily News hospitals could use the donated funds for expenses ranging from new roofs to medical specialists.
A report from the Center for Healthcare Quality and Payment Reform said more than half of Alabama’s 52 rural hospitals are at risk of closing, 19 of which the center says are at an “immediate risk” of closure.
“They are as fragile as ever,” Howard said about the financial status of rural hospitals. “And if everything stays the same, there is no light at the end of the tunnel.”
Collins asked for a committee vote on her bill, but education budget committee chairman Rep. Danny Garrett, R-Trussville, said the bill needed to be considered by the General Fund committee.
Because it’s impossible to know how many individuals or organizations may donate to hospitals or what tax they may apply their credit, the potential impact on either the General Fund or ETF can’t be calculated.
“I have a problem moving forward if we don’t know the economic impact,” Garrett said Wednesday. And he didn’t want to vote out a bill that would negatively impact the General Fund without that committee’s input.
Committee member Rep. Cynthia Almond, R-Tuscaloosa, said while there are fiscal impacts of the legislation, there are also significant consequences if lawmakers don’t act.
“If we lose our rural hospitals … there is going to be fallout,” she said.
Collins later told Alabama Daily News she would continue to pursue the bill this session.
Sen. April Weaver, R-Brierfield, is sponsoring the same bill in the Senate. It’s been pending for the last month in the Senate education budget committee.
Garrett has also warned of late that decisions will have to be made about what tax credit and exemption bills move forward in the remaining days of the session.
Lawmakers have already pledged at least $100 million per year to a school choice program and are awaiting another drop in ETF revenue when another percentage point comes off the state sales tax on groceries, though that won’t happen until at least 2025. And ADN reported Wednesday that last year’s untaxing of hourly workers’ overtime earnings will have a bigger fiscal impact this year and next than originally thought.