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Munroe tax question explained

Big vote coming Monday

Ocala, FL - May 15, 2012
Published Ocala.com on Tuesday, May 15, 2012 at 1:05 p.m.

Marion County Hospital District trustees might whittle the amount of funding they want to borrow and back with a proposed property tax.

Jon Kurtz, chairman of the board of trustees, told the County Commission on Tuesday that the board is entertaining a bond referendum for $65 million — or about half of what was previously discussed. The money would support Munroe Regional Medical Center.

Munroe Regional Medical Center is shown on Thursday March 1, 2012. MRMC is Marion County's public hospital. (Alan Youngblood/Ocala Star-Banner) 2012 | Photo: Alan Youngblood/Ocala Star-Banner.

Kurtz suggested the original $130 million figure might still be on the table Monday, when the trustees vote on the property tax resolution, which will appear on the November ballot.

But he also indicated the trustees are "leaning" toward reducing the amount in an effort to arrive at a number they and the public could find palatable.

"The feeling (among the trustees) was smaller is better, shorter is better and less dollars are better," Kurtz explained of a recent panel discussion about the referendum.

With the pivotal November vote six months out, Kurtz gave the County Commission a fresh view of what has brought Munroe administrators to this point. Afterward, commissioners also got a glimpse of the emotional struggle an economically fatigued community will wage in deciding the tax request.

Kurtz's lengthy presentation recounted the history behind the trustees' decision to float bonds backed by a temporary property tax. The trustees have formally been debating the issue since 2006, if not earlier, in an effort to make the hospital fiscally sound for the future.

He described how, on one hand, the board arrived at four for-profit suitors offering to lease the hospital, while on the other, agreed to let voters decide whether to support Munroe with a new property tax of up to $1 for each $1,000 of taxable value.

The levy, Kurtz said, would apply for five years. Its revenues would permit the hospital to issue $65 million in bonds that would refinance $24 million in existing debt and cover costs for new equipment and construction for two years.

The tax, which is expected to raise $14 million a year, has been a contentious issue among the trustees, some of whom have pushed for a sale or lease as a way out of the fiscal jungle that has long trapped Munroe Regional.

Although they have no say on putting the issue on the ballot, two on the County Commission up for re-election — commissioners Mike Amsden and Stan McClain — have publicly opposed the levy.

Kurtz told the commission that the hospital was facing a fiscal predicament driven by anticipated reductions in reimbursements from Medicaid and Medicare, which supply the bulk of its revenues, and future population growth placing more demand on services.

Kurtz recalled a consultant's observation that Munroe Regional was "viable but not sustainable."

Seeking to resolve that, the trustees had considered deals with seven companies: four for-profits and three nonprofits.

Ultimately, the nonprofits opted out, Kurtz said.

The trustees, he said, concluded that they would struggle to raise the up-front financing to cover a 40-year lease, and that those firms could not find a way to wring more efficiencies out of Munroe Regional.

Simultaneously, the trustees also wanted to provide the public an opportunity to have a say in keeping the publicly owned hospital under local control.

Kurtz said the property tax-backed bond referendum was not the ideal solution because it is not as broad-based as a sales tax.

Still, it was the best of the choices because it offered administrators more flexibility and a "certainty" in revenue projections.

"We're trying to build a consensus to get to an endpoint; otherwise, we'll be talking about the hospital's cash flow for the next 10 years," Kurtz said.

"There is no perfect answer, because if it was, it would be so obvious to everyone," Kurtz said.

"The alternative is to do nothing. The other alternative is to hope, and that doesn't seem to get us very far."

If the referendum is voted down, Kurtz said, the hospital district trustees would settle on a new owner and open negotiations in January. The transaction would likely be completed by August 2013.

The County Commission did not comment on the presentation, but some members of the public did.

Among them was Carl Crabtree, an Ocala resident who had served on the commission's blue ribbon panel reviewing a merger of the Fire Department and the Sheriff's Office.

Crabtree said he had hoped there would be more public discussion of Munroe Regional's proposal before the November election.

"The only thing that's happening now is the hospital propaganda, the campaign that has been financed with millions of dollars out of that hospital cash flow over the last six years. That's all the public knows," Crabtree said.

Crabtree said that was necessary because some trustees had publicly acknowledged that the referendum was simply buying time during which, as one of them put it, "they can hope for a miracle that will allow the trustees to retain control of the hospital."

"I've worked for a lot of companies," he said, but none of them "was based on a business plan of hoping for a miracle."

Lynette Vermillion, a former chairwoman of the trustees and a representative of the Friends of Munroe group, countered that the public would decide the fate of its hospital.

"The people of Marion County have a right to determine to choose whether or not they want to continue to support the hospital that has so faithfully supported them," Vermillion said.

She noted that trustees have operated under the state's open government laws since the panel was created in 1965, and that in the process they have developed and overseen an award-winning facility.

"We believe that local control of this structure should be retained," Vermillion said.

"We feel very strongly about the future of health care in Marion County and the preservation of Munroe Regional Medical Center as a not-for-profit, locally controlled, full service, safety-net hospital provider for the people of Marion County."


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