News Analysis
The Indian River County Hospital District is having a tough time embracing the current trend in Florida politics that tends toward reducing property taxes and curbing government spending.
Despite a looming tax reform referendum that could force budget cuts next year, the elected trustees seem determined to spend as usual, right up to the last minute.
Based upon estimates calculated by Property Appraiser Wesley Davis, the Hospital District could lose more than $2.1 million in fiscal year 2027-28 under the first-year of tax reforms, then at least another $2 million under full implementation the following year. In two years, overall Hospital District revenues could decline by 16 percent.
So it might make sense to trim the budget by, say, 5 percent or 10 percent this year in preparation for reduced revenues next year.
But that’s not what trustees plan to do.
On June 15, trustees voted 5-1 to approve a maximum property tax rate of 74.5 cents per $1,000 of assessed value that would bring in $1.2 million more in taxes next year than in the current year.
Only Trustee Paul Westcott voted against the higher maximum tax rate, saying he would not exceed the rollback rate. The rollback rate would be one that keeps property tax revenue stable despite increases in property values – 71.2 cents per $1,000 of assessed value, in this case.
“We’re not spending less,” Westcott said before he voted against the higher maximum rate. “My concern is with Tallahassee in large part, and how we operate, what we’re doing and our accountability.
“This is a valuable organization and protecting its mission is more than just writing checks. [We need to have] a long-term view about our decisions given the political climate and how we account for that,” Westcott added.
Trustee Dr. Chuck Mackett talked a tough game at the June 15 meeting and did a great job of getting the board to focus on bottom-line spending, but in the end he voted for the higher tax rate, stating his goal was to get down to the lower rollback rate during budget talks.
Trustee Allen Jones also voted for the higher tax rate with the goal of reducing it later.
“I think as we go through the agencies, we should try to get to the rollback rate. If we exceed it, it will be because we determine the need of the community compels us to do that,” Jones said.
Jones told his fellow trustees, “We have a responsibility to be frugal, and I think we ought to do that.” But Board Chair Kerry Bartlett took issue with Jones’ use of the word “frugal.”
“I think we have a responsibility to be strategic with our funding. I don’t know about the word frugal,” she said. “We need to make sure that we are living up to what we have been asked to do.”
With that, Jones backed down on his call for frugality.
The Hospital District’s current year $25.37 million budget is double its expenditures for the 2021-2022 fiscal year, as spending has crept up by $2 million to $3 million each recent year.
The Indian River County Hospital District was established 67 years ago by an act of the Florida Legislature to levy a tax to pay for indigent care at the community-owned Indian River Memorial Hospital – a simple, sensible tax that everyone could understand and probably get behind.
When Cleveland Clinic Foundation took over the responsibility of providing most hospital-based indigent care in 2019, it freed the Hospital District from its longstanding financial burden. But the district didn’t shrink its budget or cut its tax rate.
Instead, taxes have soared over the subsequent six years. No longer encumbered by providing millions in free hospital care to Indian River County’s poor and uninsured, trustees turned their attention to funding more than two dozen local nonprofit medical care organizations.
Funded programs provide free primary care medical visits for adults and children, dental care, mental health counseling, drug and alcohol abuse detox and recovery services, home health nursing, hospice, early childhood health screenings, obstetrics and gynecological care, mammograms, physical and occupational therapy and even home-delivered meals to low-income residents.
This is a massive mission creep from the initial power to tax to cover indigent care at the community-run hospital.
Part of the problem is that the Hospital District’s budgeting process is backwards. Trustees evaluate nonprofit funding applications on merit throughout the spring and early summer, long before they decide on a spending cap. This results in way too many worthy organizations that trustees desperately want to fund based upon the merit of the proposals, and not enough taxpayer dollars to go around once the time comes to set the millage rate.
To make things even stickier, several of the Hospital District’s trustees serve on the boards of or are employed by nonprofit agencies the district funds.
The public pays little attention to Hospital District spending, so the trustees’ taxing and spending decisions lack oversight from public opinion. Very few members of the public attend the meetings and almost no one speaks during public comment.
This frees the trustees to function as they do, with compassion driving decision-making more than fiscal responsibility.
