Some fiery darts have been pointed at the hundreds of taxpayers who signed a petition to halt a 3.7 cents tax for the hospital district, blaming them for the 10 cents imposed by the courts.
The process that got us to where we are is pretty complex, and the recall petition played a small role in that. Let’s look at the big picture.
The hospital district took out two loans from Farmers National Bank of Danville, both for over $6 million each. You are only hearing about the one, however, because it was a general operating bond, a loan with the backing of the government based on a municipality’s ability to pay it back with a tax base. The other loan is sitting with the other $8 million of debt being addressed in bankruptcy court.
The hospital district defaulted on the loan, the bank sued, then the hospital district made some payments on it. Nobody at the hospital would admit they intentionally defaulted on the loan so it could be addressed in court, but nobody denied it either.
The bank and the hospital wanted the same thing–to levy a tax. Let’s face it, they need the revenue and the hospital is a taxing district, so it seems logical that taxpayers would take part in the process of footing the bill.
A 3.7 cents tax would not have been enough. In fact, the 10 cents is not enough to pay the debt in the timeframe set by the loan. It would require something like a 50 cents tax to actually pay the one bill before the end of the loan period.
The 10 cents will, however, pay the monthly payments. Payments were set at a monthly rate of $47,460.90 (or close to $570,000 a year) with a balloon payment of $6.2 million due in October 2015. The 10 cents tax will provide around $573,000 for the hospital district this year. God only knows what will happen when the balloon payment comes due in two years.
So, the point is, theoretically, the hospital and the bank would have gone to court regardless of the outcome of the 3.7 cents tax, because it wouldn’t have paid the bill.
Ironically, the taxpayers who signed the petition participated in the only part of the process where taxpayers have had a voice.
The court ruling basically means the constitutional obligation to repay a general operating bond takes precedence over your rights to recall a tax rate increase, which is state law. It apparently also overrides a state law that says a hospital taxing district cannot set a tax higher than 10 cents, although for now that won’t be tested.
So, instead of being upset with a group of people who signed a petition, you might want to wrap your mind around this:
According to this court ruling, if an irresponsible municipality can find a likeminded irresponsible bank to loan funds based on a tax that does not currently exist, then the municipality can share the wealth with family and friends, run the municipality into the ground, and all state laws protecting taxpayers go out the window.
Taxpayers have had no representation in this whole process. There’s nobody interested in appealing or questioning any part of the court’s ruling, because both parties involved wanted the same thing.
So, if you want to be angry, don’t waste your energy by being angry with taxpayers who signed a petition. It’s irrelevant in the scheme of things. Basing a loan on a tax that doesn’t even exist? Then being able to set a tax retroactively several years later that overrides state law through the force of the courts? I find that terrifying, and you should too.
THE BABY AND THE BATHWATER
With that said, let’s keep one thing in mind. The hospital board has followed a legal process throughout this ordeal. The board in 2010 had the right to borrow money. This current board had the right, and obligation, to generate tax revenue to pay the bills.
This whole thing stinks but we can’t, as the saying goes, throw the baby out with the bathwater. The hospital district is our baby. Just like other government bodies–city, county, utilities, other taxing districts–the decisions they make affect us. When they mess us, we pay for it.
It’s a costly reminder of what can happen when “the people” get comfortable and our elected or appointed officials get complacent.
Even so, not supporting the hospital will not help us. It would be no different than abandoning a child that lays down on a train track. Stupid move, he should have known better, but he’s still yours.
The best thing we can do for ourselves is to help the hospital succeed. I’d rather pay 10 cents this year and for years to come than foot the $20 million bill that could become ours if the doors shut.
It’s a bitter pill to swallow, but rebelling against Westlake is not the answer. There are plenty of things to be angry about here, but let’s not waste our energy lashing out where it doesn’t belong.
