Hospital board considers doubling mill levy
A dramatic — but hopefully temporary — increase in the mill levy of Marion County Hospital District No. 1 is likely.
The district's board of directors voted in a special meeting Thursday to prepare a budget based on nine mills. Currently the district has a levy of about 3.75 mills, which has been sufficient for years to meet district obligations.
The reason is that it appears more likely that the district will operate the facility independently starting in 2005, but it doesn't have the cash right now to make that transition.
Banner Health System, which currently manages the facility, has said it does not intend to renew that contract past Dec. 31, 2004.
For the first several months of 2005, most of the income from Medicare, Medicaid, and other insurance will continue to go to Banner, for services rendered in 2004. The district has some savings, but there won't be enough income during those months to pay its bills.
If another management company comes in under a new contract, it would have enough cash flow to cover those months, officials said. But if the district is independent, it needs from $1 million to $1.5 million to meet its bills, until insurance payments start flowing to it directly.
The other option is to have $1 million in the bank, and use it to meet costs until insurance payments kick in.
In 2002, one mill will generate about $45,000 for the district, which encompasses the eastern half of Marion County.
Nine mills in 2003 and 2004 would generate more than $800,000. The rest could come from grants, St. Luke Foundation, or possibly even a loan, officials said.
Board members Greg Bowers and Kevin Fruechting suggested the board pursue a lower increase, perhaps raising the levy to six mills.
"I hate to raise it that much when there are still options available," Bowers said.
Fruechting suggested the district postpone its decision one year, to 2004. While this might mean an even bigger mill levy jump in 2004, it also would give the district an opportunity to find grants and negotiate with a new management company.
Other board members said it was better to increase the levy over two years since grants may not come through.
"I'm not sure people understand what would happen if we didn't have this facility," said Peggy Blackman, board member. "take a major employer like this out of the county, and it would be devastating."
Member Martin Tice said the tax increase would be manageable for area residents and a wise investment.
"If you have to drive someplace else (for medical care) you'll spend that much in gas and food," he said.
Final vote was to present a budget based on nine mills, with at least five mills earmarked as operational reserves in 2005. Voting in favor were Gene Winkler, Tice, and Blackman. Voting against were Fruechting and Bowers.
The budget will be acted upon at the Sept. 19 board meeting, held in the basement of St. Luke Medical Clinic.
Some board members said the levy could be reduced in future years if that amount was no longer needed. Others said the cost of updating medical equipment, and continual updating of the 50-year-old building, could mean boards will keep that mill levy in place.
One benefit is that a lease-purchase agreement will be nearing its end in 2005. Making that final payment will free up about $100,000, or the district could refinance it to improve cash flow, Bowers said.
