Millions of Wasted Dollars Hidden by Supervisors’ Creation of Special Taxing Districts
Part 1 of a 3-Part Series
One of the biggest secrets the Maricopa County Board of Supervisors do not want you to know is how they farm off parts of county government that chronically lose money into separate “special taxing districts” where financial losses are all but hidden from the public.
Instead of making these sinkhole areas of county government financially responsible, the Supervisors hide them where taxpayers don’t hear about their losses, allowing them to freely continue their irresponsible spending unaccountable to anyone.
Sure, the County Supervisors brag that they never directly raise your property taxes because they shift responsibility to the special districts to raise your property taxes.
Take for example this little nugget that did not get much attention. Recently, the Special Healthcare District in June voted to raise your property taxes. Did you hear about it? Did you know about it? No because the county’s special taxing districts fly under the radar of the taxpayers and largely aren’t covered by the media.
Over the next three installments, we will examine some of these districts and the millions of taxpayer dollars that are going down the drain.
Maricopa County Special Healthcare District
The Maricopa County Special Healthcare District (MIHS) was created a few years ago by a ballot proposition and consists of a healthcare insurance plan and a couple of hospitals. However, MIHS was largely created because it continues to lose huge amounts of money. The debt was siphoned off into a different district where its losses would go undetected and would not count against the county budget. Once separated, it could have its own property tax separate from the general county budget. This property tax could increase as much as its board deemed necessary because it was no longer accountable to the county.
Let’s take a closer look at the continual losses that MIHS posts, particularly the specialty clinics:
- Dental services lost $538,000 last year.
- Oncology inpatient services lost $1.7 million in 2008, and oncology drug costs lost the district $2.2 million.
- Urgent care, which is not a mandated service, lost $2 million in 2008.
We also looked at the county medical center and how it handles itself. An overview shows us that the Maricopa County Medical Center accepts any patients for treatment, even if they refuse to pay. An easy cost-cutting measure could be implemented if the district made a decision to turn away patients that refused to pay – which accounts for about 26% of its patients – and send them to other area hospitals that are better able to accommodate for their needs. Yet, the MIHS Directors haven’t made that decision, so Maricopa County taxpayers are stuck paying for their care.
Now, let’s take a look at the MIHS District’s budget for the current year. This year the district’s budget is $27.8 million. However, there is a large problem going unnoticed. You see there is this thing called a balance sheet where income and expenses are measured. On one side, the expense side, we know the number is $27.8 million but on the income side, it is only projected to be $20.8 million with no hope of making it up by the end of the year. Just to hammer home the point, that is showing that the MIHS District will be spending $7 million more than they have.
Does it get any better? No. The 2009-2010 budget is estimated to have an overall $44 million operating loss. The Maricopa County Medical Center is facing decreasing operating revenues and the amount of debt is expected to increase. Despite the fact that the Maricopa County Health Plan is seeing increasing revenues, its expenses are increasing as fast as revenues. I think we can safely predict what the result will be – expenses surpassing revenues and creating more debt. As it stands, the district owes $17 million to the county in debt service reimbursements for loans the county made to the district previously.
The hope that the debt will be cured by federal money is also not a possibility. The district currently receives federal Section 1011 money for treating illegal immigrants, but that is being cut in half, from $5.4 million this year down to 2.7 million next year so either number of those treated needs to decrease or once again expenses will exceed revenues.
In Their Own Words
We tracked down what some have said about the MIHS District and its financial standings but it has left us scratching our heads. See for yourself…
- Last fall the Chairman of the Board, Gerald Cuendet, said that if things kept going the way they were, the property tax could be eliminated. What happened since then?
- The board voted in favor of a tax levy for itself last year. One of the directors, Gail Hendrix, objected to tax levy on the basis that it was a double tax. Gail noted that since people are already taxed by the federal government to provide free healthcare to those who do not pay, why should people be taxed again at the local level? Unfortunately, the CEO of the district and a trustee for the Don Stapley defense fund, Betsey Bayless, convinced the other board members to outvote Hendrix and approve the highest amount possible for the tax levy, 7.8%. By the way, it is important to note here Betsey Bayless is making $350,000 per year and has no medical or healthcare education at all as far as we know.
We are only scratching the surface here but considering how expensive it is running the MIHS district and that costs and taxes continue to increase, does it really make sense for the Maricopa County government to run a healthcare district? Especially since The County Supervisors have made it clear they are not going to provide any oversight, the MIHS District will not provide oversight, and the fact that taxpayers already pay federal taxes to provide for federally mandated healthcare services to indigents. Seems to us that it just doesn’t make fiscal sense to tax property owners again to duplicate what could be done more efficiently in the private sector.