Aspen hospital seeks tax renewal
The Aspen Times
Aspen, CO Colorado
ASPEN – Mail-in ballots will go out this week to voters in the Aspen Valley Hospital District, which is seeking renewal of an existing property tax that helps fund hospital operations.
The ballots are due back at AVH on Election Day – May 4 – by 7 p.m. Voters may mail back the ballots or drop them off at the hospital, but any ballot received after the cutoff won’t be counted.
The mill levy, first approved in 1995, is up for its fourth reauthorization. Though the hospital is on sound financial footing, the tax remains a key piece of the facility’s income stream and helps it hold down annual rate increases, according to Terry Collins, chief financial officer at AVH.
Voters are being asked to approve a levy of up to 1.5 mills for five more years.
The question, ballot issue A, actually asks for a tax increase. The verbiage is required by state law, as the existing tax will expire at the end of 2010 and a new, identical tax is proposed in its place, starting in 2011.
The ballot also asks voters to choose candidates for the hospital’s board of directors. Initially, AVH administrators said there would be no board election, because there are three incumbents running for three seats. However, because the district is holding an election on the tax question, it is required to hold the scheduled board election, as well.
The candidates are John Sarpa, Lee Schumacher and Chuck Frias.
The AVH mill levy generates $3.5 million annually and accounts for three-quarters of the hospital’s annual net income, according to Collins.
“If the mill levy went away, we’d have to make that up by increasing our prices,” he said.
AVH rate increases over the past five years have averaged 5 percent – half of what’s typical in the industry, Collins said.
Six years ago, the hospital’s finances were in disarray. The hospital had lost millions as a result of mismanagement and unbilled services, leading to an overhaul that included dismissing the former hospital CEO and chief financial officer. With new management and outsourced billing, AVH has pulled itself out of arrears.
The hospital has built up about $43 million in cash reserves, which includes $15 million pegged to help fund a planned expansion of the facility and about $28 million that must be kept on hand in order to maintain the hospital’s investment-grade bond rating. The rating allows it to save millions of dollars in interest on its debt, according to Collins.
Interest payments last year on $21 million in outstanding bonds averaged just 0.22 percent as a result of the healthy bond rating, he said.
The hospital’s 2010 operating budget, excluding about $2 million annually that goes to paying principle and interest on debt, is about $50 million, Collins said.
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