Aspen hospital board takes stand against state tax-relief measures | AspenTimes.com

Aspen hospital board takes stand against state tax-relief measures

Janet Urquhart
The Aspen Times
Aspen, CO Colorado

ASPEN – The Aspen Valley Hospital board of directors took a formal stand Tuesday against a trio of tax-relief measures headed for Colorado’s November ballot that local governments around the state say could cripple their ability to provide services.

The impact of the measures – Amendments 60 and 61 and Proposition 101 – aren’t yet clear for many taxing entities, which have only just begun to assess the potential impact. But hospital administrators have already briefed the board on the possible consequences if the measures are approved at the polls.

The board adopted a resolution opposing the measures at the urging of the Special District Association, a group that includes among its membership hospital, fire protection, sanitation and other taxing districts. All would be affected by the initiatives, if they pass.

According to the resolution, Amendments 60 and 61 would slash at least $1 billion annually in state taxes, cutting in half the property tax dollars schools currently receive, and eliminate any practical means for governments to make road and bridge improvements, or any other capital improvements.

Proponents say the measures will protect Colorado taxpayers from “abusive” taxes and government overspending, but Pitkin County Commissioner Jack Hatfield called the impacts “devastating” during a recent joint meeting of commissioners and the Aspen School Board.

“The bottom line is, this is going to change the way we do business,” Hatfield said.

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Pitkin County has yet to fully analyze the effect of the measures, according to Treasurer Tom Oken, but the county is bracing to prepare two different budgets for 2011, according to County Manager Hilary Fletcher. One would reflect both the drop in revenue associated with Proposition 101, which would cut vehicle registration fees and vehicle ownership taxes, as well as the state’s income tax rate, and the consequences of Amendments 60 and 61. The latter measures would end voter-approved exemptions from the state’s TABOR restrictions and limit state and local governments’ ability to pay for projects through long-term financing, in addition to imposing other taxing limitations.

The hospital district, currently pursuing city approval of an expansion plan, is considering revenue bonds to help pay for the project. Such bonds are repaid with hospital revenues, but Amendment 61 would limit the repayment period to 10 years; the hospital district would typically seek a 20-year repayment, said Terry Collins, chief financial officer.

Paying off the debt in half of the time would be difficult, he said. “I would say it would be extremely difficult.”

In addition, leasing medical equipment, a regular practice at AVH, would be defined as debt and face new hurdles, according to Collins.

Proposition 101’s reduction in the vehicle ownership tax – the biggest piece of auto registration – would eliminate nearly all of the $3,150,000 in revenues it produced locally last year, according to Oken. That money was split among numerous area taxing districts, including the school district. The ballot measure would eliminate most of the roughly $600,000 that went to the school district last year, he said.

That’s essentially what it costs the district to run its bus system, noted school board member Laura Kornasiewicz.

Amendment 61 also suggests that a district’s current debt must be paid off, though the intent of the provision isn’t exactly clear, according to hospital officials.

The hospital district has about $24 million in existing debt. To pay it off at once would be “financially devastating,” Collins said. “We wouldn’t be able to do it and function normally – let’s put it that way,” he said.

Litigation will likely be necessary to clear up some provisions of the measures, if they pass, predicted Elaine Gerson, AVH legal counsel.

In the meantime, a broad group of bipartisan leaders, local governments, civic organizations and Colorado businesses are mounting a campaign against the measures.

“We have to really start working together,” Commissioner George Newman told the school board. “We’re going to have to work really hard in our collective spheres of influence to defeat these.”

The measures could have a major impact on the local school district, said Kate Fuentes, district finance director, though the many elements of the measures make quantifying the overall impact complex.

The ability to seek short-term debt to cover school costs until property taxes are collected is just one practice that is apparently in jeopardy, she said.

In addition, Amendment 60 would make AVH and numerous other taxing districts pay property taxes on their facilities, noted David Ressler, hospital CEO. They are currently tax-exempt government facilities.

“It would be very, very, very devastating on a lot of our operations if this goes through,” said John Sarpa, chairman of the AVH board.

janet@aspentimes.com

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