Monday, October 19, 2009

How Much Will The Wishard Referendum Question Cost You In Higher Property Taxes?

The Indianapolis Star is determined to enable the Marion Co. Health & Hospital Corporation in its efforts to hoodwink you into believing a new county hospital at a cost of more than $700 million can be built without higher taxes. The truth is out there. You just have to do a little more digging. As I've told you repeatedly, the proposed county hospital will require more than $700 million in borrowing, represented by general obligation bonds that are backed by new property tax levies. The Wishard referendum question doesn't tell you that. That's because HHC officials want to deceive you into believing you can get something really big for nothing.

The Indiana Dept. of Local Government Finance has posted information about the Wishard referendum you won't learn reading the flashy but misleading handouts the proponents of the new hospital are distributing with the headline, "A New Wishard Without A Tax Increase," or the news coverage in the Indianapolis Star. The pertinent information you need to understand as a property tax owner is how much will it cost me. When you go into the booth to vote on the Wishard referendum, the question you will read doesn't tell you how much a new hospital will cost, how it will be paid for, how long it will take to repay or how much it will cost you as an individual taxpayer. It doesn't even tell you the purpose of the referendum is to construct a new county hospital.

According to the DLGF's public notice on the referendum, the maximum increase in the debt service fund tax levy will be $54,807,604 annually. If it becomes necessary to tap property taxes to pay for the new hospital, HHC will be authorized to levy a tax increase of as high as $0.1494 per $100 of assessed value. For a homeowner living in a home assessed at $200,000, you can expect to pay as much as $300 annually in higher property taxes. Equally important for you to understand is that this tax levy is not subject to the state's property tax caps. IPS residents are already paying higher taxes for last year's school bond referendum. This will make that tax increase look like peanuts.

If you're like me, you supported Greg Ballard's election in 2007, in part, because he opposed higher taxes. He opposed the 65% increase in the local option income tax, and he promised to fight for the repeal of property taxes. After he got elected, he made the income tax increase permanent, even after the State picked up Indianapolis' huge public safety pension liability as part of a 1% increase in the state sales tax, he supported the $27 million a year tax increase and borrowing plan to bail out the Capital Improvement Board, he has pushed double-digit rate increases for water and sewer, he wants to raise parking fees, and he's raised a host of other fees. To add insult to injury, Ballard is pushing adoption of the Wishard referendum but is chiming in with the proponents in falsely claiming that it proposes no property tax increase. He also promised to end the big public give-aways that personified the Peterson administration. That didn't stop him from pledging more than $20 million of your tax dollars to help political contributor Tadd Miller develop his retail/housing project downtown. Had enough Indy?

UPDATE: The Indiana Law Blog has a good point on the discussion of the HHC using nursing home revenues to finance the construction of the new hospital in the context of the recent discovery that the state budget law may have intentionally or unintentionally exempted all nursing homes from property taxes.

The question is this: Have these private nursing homes in other counties applied for the 10-year retroactive property tax refund discussed in earlier ILB entries from Oct. 4th and Oct. 3rd, under the headings "Requests for retroactive property tax exemptions threaten county budgets" and "Did an amendment to this year’s state budget open the door to tax refunds for nursing homes across the state?"

If so, and if the refund efforts are successful, other counties' property taxpayers will be paying for the Wishard expansion.

4 comments:

Had Enough Indy? said...

With the tax caps for homestead properties dropping to 1% next year, the layering of additional tax increases on top of that will put property owners in Marion County at an increasingly competitive disadvantage to property owners in the surrounding Counties.

If a person can buy a similar house with a 1% property tax cap, why would they pay the same price for a house with a 1.14 or higher 'cap'?

Now, if you think that a new Wishard campus, with a new hospital, plus a new outpatient facility, plus a new faculty office building, plus a new parking garage, plus a new power plant (cost estimate over $1300/sq.ft), is worth increasing your taxes and decreasing the sales price of your house, well then do go ahead and vote YES.

If you think that government should be honest with the public about how things are financed, you should consider voting NO. Remember, a new Wishard campus can be built with revenue bonds that do no use property taxes for repayment. Wishard does not need a public referendum to float revenue bonds. So, a NO vote does not jeapardize the project; it just clears property owners from having to repay the bonds.

Edward said...

You would pay the increased tax for the location. Younger people (the future of the state) want to live in cities... not the boonies.

If anything this project is over financed, which is a good thing. This will never effect anyones taxes. The only reason it needed to be backed by tax payers is to secure an investment grade bond rating. Unsecured bonds can't get high ratings. By securing the bonds with the promise of tax payer backing Wishard was able to get very low interest rates. Wishard also has huge cash reserves in the event that revenues fall short. Who ever planned the financing of this project made it a point to be super conservative.

Stop being such a gloomy guss.

Downtown Indy said...

By the way, Edward, the 'huge cash reserves' are supposedly a 'down payment' (Gutwein's words).

Had Enough Indy? said...

Well, AI is 'gloomy gus', while I am called paranoid over on HadEnoughIndy. At least we're moving in the right direction.

The public has a right to be fully informed when they go into the voting booth.

H&H wrangled a pass on any clear public question - unlike other governmental units, they were allowed to not mention the price, not mention the possible tax rate increase, not mention it would be on top of the tax caps, and not even mention that they were looking to build a single building. Hardly informing the voters.

Then, Gutwein and company, and even initially the Star, repeated they would not need to repay the bonds with property taxes. Hardly informing the voters.

Finally, the legally required notices were published. Many people pointed out that Gutwein and his legions had not mentioned that the bonds would be secured with property taxes. That is information that is relevant to the voting public - and Gutwein and company knows that.

Call me whatever you like. But, I am steadfast in the belief that holding the referendum in an off election year, getting a pass on the relatively mild requirements for a public question, not offering full disclosure that the taxpayers ARE on the hook to repay the bonds, were all intended to make it as easy as possible for Gutwein and company to win.

The public interest is multi-faceted. One aspect is for the public to be given full information so that the public can clearly decide if they want to be on the hook for a new Wishard campus.

That was why the law required a referendum in the first place. It was not to ask the public if they wanted a lower interest rate. It was not to ask the public if they liked the job Wishard provides. It was not to ask if they like anything about Wishard. The law required a public referendum to see if the public wanted to be on the hook for repaying bonds for a new Wishard campus.

You are in favor of Wishard's program and in favor of possibly having to pay more property taxes to pay off the bonds. That's fine. That's called informed consent in other arenas. That is all many of us were seeking for the rest of the voters.