Despite the fact that residents are already faced with higher overall tax burdens from rising home values, the Midland Hospital Board recently proposed a property tax rate increase that will further burden local taxpayers.
The proposal was passed in a split 3-2 vote. If approved by county officials, the tax rate would increase to 45 $0.1245 cents per $100 in valuation, up 4% from the current $0.1183 cents per $100.
At a time when the economic environment in Midland is less than ideal, both MISD and city council officials have vocally committed to not raising tax rates. So why is the hospital board asking for more money from property owners? According to the hospital management, the primary factors are: a decline in mineral appraised values, a decline in federal and state reimbursements, more unpaid bills due to high-rate deductible insurance, tougher economic times, and a desire to expand reserves and certain services.
In addition, the hospital faces a $3.8 million dollar deficit this fiscal year.
While many hospitals are undoubtedly affected financially due to the circumstances caused by the Affordable Care Act, the budget presented to the hospital’s board of directors at the July 30th meeting brings into question whether or not a tax rate increase is truly necessary.
The hospital’s total cash on hand is approximately $73.2 million. According to Midland Memorial CFO Stephen Bowerman, “$12.8 million of that is restricted by donors for ‘Campaign for Tomorrow’ and $25.9 million is held by the Midland Memorial Foundation, which is restricted to the purpose identified by the donors.”
In other words, the hospital has $34.5 million in unrestricted funds and an additional $25.9 million that could be used to offset a tax increase should the donors allow it.
Additionally, Midland property appraisals (and therefore collectible tax revenue) have actually increased over the last year. With mineral values falling and home values rising, the average homeowner in Midland will already carry a higher tax burden next year. If the proposed tax rate increase passes, the average homeowner will be hit with an even larger increase.
Midland Memorial Board Member Jeff Beard, pointed to MISD as an example of a taxing entity that has chosen to reallocate funds and tighten its budget, despite the economic challenge.
“Everybody’s budgets are changing all around us because of the downturn. Just because we can raise taxes to stay on budget doesn’t mean we should,” he said. “We need to struggle and get lean and mean just like the [private] companies around us.”
Responding to an email about the issue, the hospital board’s president, Tommy Lent, described the “difficult decision” ahead.
“The difficulty seems to boil down to two core issues,” he wrote. “One, even though the impact to the average homeowner would only be about $10/year, philosophically, does it seem right to ask for a tax increase from a county that’s currently experiencing an economic downturn (even though tax rates were decreased during the recent upturn)? No. Logically, does it seem right to knowingly financially constrict hospital operations (and thereby theoretically reducing the quality of care) on our one-and-only hospital? No. Having both answers being ‘no’ obviously creates the dilemma.”
County hospital boards often receive far less scrutiny compared to other local government entities, such as city councils and school districts. This leaves board members to operate based on their assumptions about what constituents’ want, usually filtered by the bureaucracy they are charged with overseeing.
For proper and accurate representation, citizens must be more engaged with their elected officials – at all levels.
The hospital board’s second and final hearing on the proposed tax increase will be Wednesday, August 19th. It will be held at 11:45 a.m. at the Midland Memorial Hospital Administration Board Room.
