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transcripts
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October 28, 2003
Host:
Michael Grant
Topics:
· Proposition 414
In-Studio Guests:
· Doug Cole, Spokesman for Yes on 414;
· Michael Hunter, vice-president of the Arizona Tax Research
Association. Mr. Hunter is opposed to proposition 414
Important Links and
Resources
Learn
more about Proposition 414
>> Michael: Proposition 414 asks Maricopa County voters to save
its hospital by approving a special healthcare district to take
over the Maricopa Integrated Health System.
>> Fulton Brock: I emphasize this is the most important decision
that voters in our county will make this entire century in terms
of quality of life.
>> Michael: That special healthcare district would add a new
property tax and have the ability to bond. That has some homeowners
worried.
>> Chuck Jones: There's just so much to this whole proposition
that doesn't meet the eye.
>> Michael: Tonight we take a closer look at proposition 414
and hear arguments for and against. Good evening, I'm Michael
Grant. Welcome to "Horizon." On the surface Maricopa County voter
face a simple question, should a healthcare district be created
and a new property tax added to pay for and run what is now the
Maricopa Integrated Health System? Or should the Maricopa County
board of supervisors continue to be responsible for funding it?
In reality, voters are asked to approve something is much more
complicated. Paul Atkinson has the story.
>> Reporter: Maricopa Medical Center is the backbone of Maricopa
integrated health services, the county's healthcare delivery system.
About 20,000 people are treated each year at the 541-bed facility,
including hundreds of jail and prison inmates. While hospital
features one of five trauma units in the Valley that sees about
50,000 people annually. It's acclaimed burn center is one of two
facilities in the state can that treat burn victims. The other,
a Tucson hospital, is not equipped to treat small children. Maricopa's
burn center is. Last year it treated about 600 burn victims on
an inpatient basis and 2500 on an out patient basis. The Maricopa
Medical Center also serves as a teaching hospital.
>> James J. Kennedy: We have 245 roughly residents right as we
speak, all of them in specialty training in seven different specialties.
Of these anticipate if statistics show what has gone on in the
past, 50% will stay in the Valley. That's very important because
Phoenix is no longer a draw for physicians seeking a new place
to practice as it once was 10 or 15 years ago.
>> Reporter: The Maricopa Integrated Health System offers inpatient
and outpatient psychiatric facility at two facilities, this one
in Mesa and another at its East Phoenix campus. The system also
has 11 family health centers spread throughout the Valley besides
offering primary care for children and adults, many of the centers
feature dental care and pharmacies.
>> James: We see patients that live in those vicinities. The
largest number of patients we see really have -- are AHCCCS patients
that are on our state's Medicaid program, and a large number of
those are our own insurance plan which is the Maricopa healthplan.
>> Reporter: Because Maricopa Medical Center treats more than
its share of people who can't afford to pay, it qualifies for
federal funding that compensates hospitals for such care. That
funding mug through state government. And Arizona like many states
with holds that money from local governments that provide disproportionate
indigent healthcare. In 2003, the federal disproportionate share
kept by the state amounted to more than $50 million. This year,
it's $78 million.
>> Fulton: The county was given this mandate first by the state
and then by the federal government beginning in the 1980s. Our
county has done a very efficient job in delivering public health.
But now the lack of the reimbursement, primarily from our Medicare
costs, the $50 to $75 million a year that rightfully should have
gone to the county healthcare system has put us in a position
that we have to have a dedicated revenue stream.
>> Reporter: Maricopa County board of supervisor chairman Fulton
Brock explains hospitals make money off patients who can afford
private or semi private rooms. Something Maricopa Medical Center
doesn't have.
>> Fulton: The peer mix is weak because we don't have any private
rooms at the County Hospital. All the bathrooms are at the end
of the hall like in a dormitory situation.
>> Reporter: The last two years, Maricopa integrated health services
has lost $24 million, causing the county to look at various options.
>> Fulton: We looked at selling the hospital, privatizing the
hospital, doing everything that we possibly could to change our
delivery system to make it attractive, and we discovered that
there is no interested legitimate party in buying the County Hospital.
>> Reporter: So county supervisors asked a citizen task force
to come one a solution. It came back with the recommendation to
create a special healthcare district funded by property tax. The
county asked the legislature to create such a district. It argued
a provision of the 2000 healthy Arizona initiative, prop 204,
relieved Maricopa County from having to provide healthcare services
above and beyond instant gent healthcare after July 1st, 2006.
But the county wants to continue to treat all patients, not just
those who can't afford it. Lawmakers approved a special healthcare
district for Maricopa County, contingent on a public vote. The
special healthcare district would be allowed to impose a secondary
property tax on homeowners at a rate that would cost the owner
of a $150,000 home almost $22 a year. Lawmakers capped the amount
of property taxes at $40 million the first year, a special district
can also borrow against future taxes in the form of bonds to use
for construction.
>> Fulton: Once a healthcare district is voted and established,
revenues can then be pledged against institutional financing to
allow a new facility, and the experts tell us it's more cost effective
to build a new building, smaller, more modern building, rather
than try to renovate a 50-year-old did design that has leaky pipes,
and so what we'll do is finance the revenue stream from the taxing
district once it's approved by voters, an institution will then
allow us to bond, if the public so permits and approves, and then
that will allow a new facility to be built on campus. There's
60 acres there, and then slowly the old building will be abandoned
and probably raised.
>> Reporter: Brock estimates a new hospital will be half the
size of the current one with 250 beds costing upwards of a quarter
billion dollars. He anticipates it will some day be part of a
health complex that will contain a medical school, ending the
Valley's drought of being the only major metropolitan area without
one.
>> Fulton: Our question is, as a metropolitan area what vision
do we have 20 years down the road? Do we want to be a first-class
medical provider of care or do we want to allow the absence of
public delivery of clinical services to provide a big vacuum?
>> Reporter: The county may get a first-class medical system,
but the state law that allows the creation of a special healthcare
district prevents Maricopa Medical Center from expanding beyond
its current facilities to avoid additional competition with private
hospitals and healthcare companies. The county can only build
a new hospital within a three-mile radius of its current facility
near 26th Street and Roosevelt. It cannot build or require a General
Hospital outside that radius without voter approval. It cannot
open any specialty hospitals outside the three-mile radius and
cannot operate any additional outpatient surgical centers.
>> Sen. Dean Martin: Whenever you have a government entity in
direct competition or potentially direct competition with the
private sector, you need to have some sort of controls to make
sure they don't go out and really devastate or take over a private
sector industry.
>> Reporter: Senator Dean Martin voted against authorizing a
special is healthcare district for Maricopa County.
>> Dean: A brand-new property tax is not is the way to fund this.
We're already receiving federal dollars. There are other sources
of income, but a property tax is the worst thing we can do to
Arizona. Maricopa County and the Valley have the third highest
commercial property tax rate in the nation. When we're trying
to attract manufacturing jobs back to start adding a new property
tax is exactly the wrong direction.
>> Reporter: Chuck Jones is a Phoenix home owner and property
tax watchdog.
>> Chuck: I don't think we need another layer of government.
I don't know what five -- I don't understand, we're talking about
a board of five elected officials who will serve without pay.
How much time are they going to spend each year without pay to
oversee what is nearly a billion-dollar system above and beyond
what the current CEO and his staff are already doing?
>> Reporter: Jones is concerned what may start out as a small
property tax may grow out of control.
>> Chuck: They are telling me a 20, 21, $22 average tax on a
$150,000 home. I want to know in year 20, what's the most I can
pay. I know after alt fuels which was supposed to cost no more
than 10 million and cost 140, if that went 14 times past s my
$20 going to be almost 300 in year 20? And nobody will really
tell me.
>> Reporter: Jones attended public meeting on the proposition
but hadn't heard anything about plans to build a new medical center
until informed so by "Horizon."
>> Chuck: The publicity pamphlet just says they want to help
preserve the funding for the existing facility. So the public
has been duped unfortunately, and it really ticks me off that
this kind of information comes out so late in the game and the
emphasis has been on early balloting. They want people to vote
early these days so that they cast their vote in favor before
they find out exactly what they're voting for. That's just making
a mockery of our electoral process and our privilege to vote.
>> Reporter: Senator Martin suggests voters reject Prop 414 in
favor of a better alternative.
>> Dean: You're being asked to you want to raise property taxes
to build the hospital. If you vote no and vote not to raise property
taxes, I can guarantee you the state will be back in special session
or regular session looking for another way to keep that hospital
open because we can't afford to let it close.
>> Reporter: Indeed, Maricopa Medical Center staff says is the
closing of the hospital would be devastating to the entire healthcare
system in the Valley. That's why it must be saved. A yes vote
would ensure that.
>> James: If we were not here as Maricopa Integrated Health
System, I cannot really describe and I think it's hard to understand,
how the other emergency rooms would be swamped. The trauma system
would break. It would not function any longer. It just -- somewhat
like has happened in the Tucson area recently. In Maricopa County
it would not function. The pediatric population would suffer.
The neonatal intensive care units would be quickly overrun here
in Phoenix. We would have to transfer patients, as I'm a grandfather,
my grandkids would have to go perhaps to other states for their
care.
>> Michael: Joining me now is Doug Cole. He is the spokesman
for yes on 414. Also here is Michael Hunter, vice-president of
the Arizona Tax Research Association. Mr. Hunter opposed to proposition
414. Gentlemen, good to see you. Doug, why should people vote
yes on 414?
>> Doug Cole: I think in that great set-up piece gave the public
a lot of good reasons. We have Arizona's only burn center, number
one. We have one of five level 1 trauma centers in the Valley.
Another feature of the hospital, a lot of people don't realize,
is that we are a huge training hospital for doctors, and doctors
tend to stay in the communities of which they've done their training.
We train over 250 doctors a year at Maricopa Medical Center. We
also care for prisoners. We have a big correctional practice at
the hospital. That's also very important. And we have 11 acute
family clinics around the city that take care of families and
are their first line of defense for healthcare. So it is a true
community asset that the community cannot afford to let go away.
>> Michael: Doug, let me just clarify something that actually
I was not aware of until -- well, this evening. This would really
take Maricopa County out of the healthcare delivery business and
turn it over to this district, the hospital and the clinics both?
>> Doug: That's correct. It would take the clinics, the teaching
portion of the hospitals, it would take -- there's also two behavioral
healthcare hospitals, one out in Mesa called desert vista and
one at the main campus at 24th and Roosevelt. It would take the
whole what's called the Maricopa integrated healthcare system
out from underneath Maricopa County and put it a new special healthcare
district. This is a district statutory scheme that's been used
across the state. Most recently up in Apache County for Springerville.
It's a statute that is tried, true and tested.
>> Michael: Michael hunter, why is this a bad idea?
>> Michael Hunter: Well, Michael, I think that the -- first of
all, ATRA, Arizona Tax Research Association, is not advocating
for the closure of the hospital. This is a debate going on about
the finance mechanism for it. First of all, I think there are
three questions that voters should be asking themselves when they
go into the -- the vote for this. First is the -- has the county
received adequate revenue from property taxes in order to fund
its priorities? In the last five years, levies for the county
have gone up 68%, about 124 million dollars. About 74% of that
is attributable to new construction. But 50% -- excuse me -- 50
million of that is attributable to increases on existing property
taxpayers. So our belief is that the county has had significant
levy increases that should have been adequate to fund a lot of
different county priorities.
>> Michael: The point being that they've got sufficient money
without creation of this special hospital?
>> Hunter: And if we're wrong on that, if that is not the case,
then the second question, I think, still has merit, and that is,
is a new layer of government necessary in order to operate this
hospital? The county has more than sufficient tools, we believe,
to fund this operation. They've got 12 million dollars approximately
within their current levy limit where they could do what they're
asking voters to do, and bite the bullet and increase taxes in
order to fund the hospital within their current levy limit without
any voter approval requirement. They also have levy limit overrides
if they were bumping up against that levy limit. They currently
have bonding authority that they could use in order to do this.
And then the final question is simply how much new authority would
this new layer of government have to tax taxpayers and it's a
significant amount. $40 million would that grow by the current
formula for levy limit growth in five years, our calculation is
that we could be seeing a levy limit capacity of $60 million.
>> Michael: Doug f I understand correctly, the county was only
out of pocket about 12 million last year?
>> Doug: About 20 combined, 13 million was the direct subsidy
that was put into the base county budget. That replaced the previous
money we got from the federal government. I'm sure we'll get into
that later. Then about $8.9 to make the books balance at the end
of the year. Weaver to make it books balance at the end of the
year. So it was about 22 million last year.
>> Michael: So 20 million dollars. Why does this allow up to
$40 million? Double that.
>> Doug: Well, unfortunately the healthcare industry is very
cyclical, it goes up and down, you have bad years, you never know
how many people will present. We need to be sure we're able to
cover the minimum number, which is what we just discussed, but
we're also, as chairman Fulton Brock discussed in the set is up
piece, is that facility is literally falling down around itself.
There are huge capital requirements and dire needs there, and
the legislature and the citizens task force that came up with
this figure, and it's just -- it's a figure, would allow the elected
board to make those decisions so that they could slowly update
and correct some is of these vital health and safety needs that
need to be fixed at that hospital.
>> Michael: Now, can I safely assume that if the county no longer
has that 20 million obligation to fund the healthcare system that
we'll see taxes go down by $20 million?
>> Doug: Well, I just want to respond to a few things if I may
at that point because that's a good set-up piece, a very good
set-up question, because, yes, the county has -- as one of the
fastest growing cities and counties in the country, we're the
fifth largest county now in the United States, we have seen growth
in our assess id valuations. In fact, as has been widely reported,
in our primary levy we've seen a $30 million growth, but that's
this year. Now, the recession tends to lag in assess id valuation
growth. We anticipate we'll only see $7 million in growth in our
primary rate next year.
>> Michael: But all other things being equal, if I've lost a
$20 million obligation, I should free up $20 million?
>> Doug: But we have our good friends down at the state capitol
who have taken, because of their budget woes, Michael, they have
taken now $32 million a year out of our base to help balance their
budget. So any of our levy growth that Michael just talked about
is now out the window. It's gone. Then we're also faced with our
mandated service of criminal justice, which is growing at 10%
a year.
>> Michael: So I take it there's no assurance on a property
tax decrease?
>> Doug: It's going into the criminal justice system -- our case
loads are growing at 10% a year.
>> Michael: Michael, what about the argument that the county
delivering healthcare services is a mission that's kind of passed
it by, it to other return tights core missions of criminal justice
and other things, and this is logical to move the county healthcare
system out of county government into a special district.
>> Hunter: The fact that the county is looking to a special
district to do this within the county jurisdictions and the county
assess id valuation keeps it as a county level. If we wanted to
talk about whether or not this is a county function, I think that
we need to be looking at who is served by this state, and the
proponents of the -- by this hospital. The proponents are looking
at a lot of the services that are being provided statewide, and
I think there is an argument that the state has a responsibility
perhaps and this should be a statewide hospital. If it is going
to continue to be a county function and a responsibility of the
county taxpayers to fund it, it's good work for a taxpayer watchdog
organization to have new -- five new elected officials to be looking
after, however, but from a taxpayer perspective, I think they're
very vulnerable.
>> Michael: Is part of the research association's opposition
to this the fact that the property tax burden would fall much
more heavily on businesses? That was Dean Martin's point also.
>> Hunter: We have not been making that the main point in our
concerns. That's a concern for all property tax. We have long
advocated for a single assessment ratio for any future voter approved
bonds or overrides. So this special district would also if we
had a single assessment ratio for anything that was voter approved,
it would be more transparent so that the impact on homeowners
could not be underplayed.
>> Michael: Doug, why not do this, why not forget about creating
another level of government. Go to the state and say, listen,
give us $20 million of the disproportionate share monies or whatever
it takes and we'll be fine and we can skip all this other stuff?
>> Doug: Two reasons. First reason, and it's an issue that you
brought up about the other layer of government, creating the district
is truly a necessary function to operate the hospital in a modern
fashion. We are constrained right now on how the hospital can
be operated. In order to buy Band-Aids we have to go out through
the very laborious county mandated procurement process. So that.
Hiring folks, you know, the extreme nursing shortage, how we go
out with registries and other employees, we're under the burden
of big brother government on that. The other issue is we cannot
partner with other part private hospitals. We can co-locate a
private facility because it's in violation of the constitutional
ban of the gift clause in the constitution.
>> Michael: If I'm reading the restrictions correctly, I don't
think the private hospitals want anything to do with you guys.
>> Doug: They want to partner with us on certain functions, though.
We cannot do that now. We can't go out to MED pro who is our doctors
group at the hospital and say, let's go in together on this new
whizbang medical machine. We can't do that now because we're constitutionally
prohibited.
>> Michael: Michael, I think that's the response to your point
that you made about why create a whole new level of government?
What do you say?
>> Hunter: There are rationales the county has used for the
creation of lots of special districts. If you look at county government,
in 1980 you had basically a flood control district that had been
created in previous years. If you look at the structure of county
government now, they've carved out more and more separate silos
with a rationale for each of them. This is -- the core of this
is about providing relief to the county general fund so that they
can -- we're not going to see any tax relief associated with this
relief that the county gets, but it will be for more spending
at the county level.
>> Doug: If I may respond to that, the county looks at this pretty
simplistically. In 2001 after the voters passed proposition 204,
which raised the healthy Arizona initiative, it passed overwhelmingly
by the voters and the voters of the state say we're going to raise
AHCCCS eligibility up to 100% of the poverty level. At that point
during negotiations to implement prop 204, the county was no longer
mandated to provide healthcare services. So the county board,
we look at our mandated services, these are not statutorily mandated
services, these constitutionally mandated services and that's
criminal justice, and as I stated earlier --
>> Michael: Jails, courts --
>> Doug: Jails, courts, public defenders, sheriff, you know,
the whole system. That's mandated by the constitution of this
state and by the laws of this state. We're seeing 10% growth in
that. On the healthcare side, we are no longer mandated to perform
these services. The board is unanimous in agreeing that we need
to be providing these services because we're such a pillar of
the medical community in this town. So the voters need to make
the decisions. The voters of Maricopa County, do we want to be
in this enterprise? And the county board of supervisors overwhelmingly
think we need to be in this enterprise and that's why we're in
front of them.
>> Michael: Real quickly, do I understand correctly the supervisors
have now indicated they will not necessarily close -- they will
not close the County Hospital if this does not pass?
>> Doug: There are three votes to start shutting down the system
if this does go down, and that's what you need.
>> Michael: Three out of five?
>> Doug: Three out of five.
>> Michael: So they will shut it down.
>> Doug: They will start shutting it down, out of budgetary necessity.
So this isn't a windfall.
>> Michael: Like to learn more about proposition 414, please
visit the Channel 8 website at www.kaet.asu.edu, click on "Horizon"
on the left side of the page. Once there you'll find a web page
with official ballot language, analysis of what a yes and no vote
means, plus links to websites with more information. Here's a
look at what's on "Horizon" tomorrow night.
>> Reporter: We'll have a preview of the United States Supreme
Court session. ASU Law Professors Cathy O'Grady and Paul Bender
take look at what's on the docket in our U.S. Supreme Court preview.
We'll have analysis of the major cases before the court, including
the McCain-Feingold campaign finance law, Wednesday at 7:00 p.m.
on "Horizon."
>> Michael: Then on Thursday, a look at legal challenges to the
maps drawn by the state's independent redistricting commission,
and, of course, please join us for the Journalists Roundtable
on Friday for the latest on the special session and the upcoming
election. Thanks for being here. I'm Michael Grant. Good night.
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