A rural hospital in Bay Minette has had a special property tax renewed by voters three times – in 1965, 1987, and 2007.

None of those votes included campaigns that could be considered controversial. Voters showed up, checked a box for a renewal, and moved on to decide much more consequential contests.

But in the halls of the Alabama State House this spring, legislation that would give voters a fourth chance to renew the tax has hit a rough patch. This is the legislation that needs to be approved before the special hospital tax district can reappear on the ballots.

With Wednesday serving as the final day of the spring session, it appears unlikely there is enough time to get the tax approved by the Alabama State Senate.

“It’s a tax people have been paying on for years, and it’s very minimal,” said Rep. Donna Givens, R-Loxley, who represents much of the area where voters pay the tax to support North Baldwin Infirmary. “But the tax helps the north Baldwin hospital, a rural hospital that you don’t want to see negatively impacted.”

Hospital tax

At issue is the fate of HB486, a local piece of legislation that, if adopted, would require the approval of a constitutional amendment to extend the special hospital tax district for another 20 years beginning Oct. 1, 2027.

The special tax district assesses 2 mills of property taxes to provide revenues for the hospital in Bay Minette. The renewal would appear on ballots to approximately 20 voting precincts in Baldwin County.

The tax represents approximately one-quarter of the overall financial support to the North Baldwin County Health Care Authority. In fiscal year 2022, that equated to around $643,000.

“It’s been in place since the 60s, and it’s money well-used for our area so I’m disappointed,” said Bay Minette Mayor Bob Wills.

Special hospital tax districts are not uncommon in Alabama, with roughly 28-30 counties having some sort of property tax levy to support hospital funding. And less than a dozen hospitals in Alabama have a portion of their local sales taxes earmarked to support healthcare and/or fund the hospitals.

A spokesperson for Infirmary Health did not respond to a request for comment.

Sales tax controversy

Givens and Wills blame the hold up on the fallout from a dispute among Baldwin County’s state lawmakers over the distribution of a 1 percentage point of a sales tax that has, since the 1980s, gone toward financing the Baldwin County School System.

That controversy pits Sen. Chris Elliott, R-Josephine, against some of his legislative colleagues. Elliott says previous agreements should enable the tax to be distributed to two relatively new city school systems in Orange Beach and Gulf Shores. Most of the Baldwin County legislative delegation – including Givens – argues that the revenue should be retained by the Baldwin County School System.

Elliott said Tuesday that the sales tax dispute is one of the reasons why the hospital tax legislation (HB 486) is being put on hold.

“If the delegation is wanting to have a conversation about taxes, I’m happy to do that,” Elliott said, arguing that the sales tax dispute involves assessing a tax on Gulf Shores and Orange Beach, though none of the revenue is redistributed back to the city schools.

“We are taking it from Orange Beach and Gulf Shores kids,” Elliott said. “There will be a point where we need to sit down and hatch this out. I hope the delegation will engage on the tax issue.”

Elliott noted that HB 486 still has some time. The current 20-year tax doesn’t expire until 2027, which means it can still be reconsidered and approved during the 2026 spring legislative session.

“We do have another year,” Wills said. “I won’t say it’s comfortable, but we got to get it through next year.”

Wills said he is disappointed in Elliott and accuses him directly for holding up the otherwise non-controversial bill.

“I know he’s trying to get leverage to get what he’s wanting for Gulf Shores and Orange Beach and their school systems,” Wills said. “This has nothing to do with that. It’s disappointing he’s using these tactics to hurt other people to get one thing that he wants.”

Local bills

The sales tax dispute split the Baldwin County delegation in April and created public disputes in Montgomery and among school officials in the coastal county.

Sen. Greg Albritton, R-Atmore, who has feuded with Elliott over the sales tax issue, said other local bills are facing a perilous situation on the final legislative day. They include two annexation bills for Loxley and Daphne. Also unresolved is whether to move forward legislation that would allow jury trials to take place at satellite courthouses in Foley and Fairhope, helping alleviate overcrowding at the Baldwin County Courthouse in downtown Bay Minette.

Albritton said the courthouse legislation would help the county’s judges do their job, and appeared to be the “quickest and easiest thing to do” until the sales tax “kerfuffle hit.”

Rural hospitals

As far as the hospital tax goes, Albritton said he is worried about any potential looming loss of revenue for a small hospital in Alabama.

Rural areas throughout the U.S., including those in Alabama, have seen their hospitals close their doors at higher rates than facilities in non-rural areas in recent years. A report from the Center for Healthcare Quality and Payment Reform released in February shows that one-third of all rural hospitals in the country are at risk of closure because of serious financial problems.

The concerns could be heightened if Congress approves a federal budget that cuts billions of dollars from Medicaid, which has long been a crucial federal program for lower income residents. The U.S. House is looking to cut $880 billion mostly to Medicaid to support President Donald Trump’s tax break legislation.

Albritton said he is worried a statewide bill giving tax credits for those who donate to rural hospitals might not be enough to offset a 2-mill tax cut – if it happens.

“I’m fearful over the loss of a revenue for the hospital,” he said. “All of them are struggling.”