Parcel tax only option for hospital, official says

A Sun reader called recently and complained because, as a fixed-income retiree (who didn’t want her name used), she would have to shoulder the entire $195 per-parcel tax sought by the hospital to help fund its operations.
Meanwhile the same $195 annual expense would be split among all the residents of a multi-unit apartment building on a single parcel.
Such a parcel tax wasn’t fair, she said.
Two experts in the field of hospital finance have heard such arguments before. But they say that the Sonoma Valley Hospital’s March 6 parcel tax was the only realistic option that the hospital had.
“There’s no such thing as a perfect tax. It’s going to make somebody unhappy,” said Jim McSweeney, the hospital’s chief financial officer.
McSweeney acknowledged that, under a parcel tax, every property owner pays the same amount, regardless of their income or their property’s value.
For example, “the Sonoma Mission Inn pays the same amount as you, if you own a house,” he said.
But, by law, district hospitals can’t levy an ad-valorem (a Latin word meaning “by value”) property tax to fund operations, McSweeney said.
That would be a more progressive tax because taxpayers whose properties are assessed at a higher value would pay more tax.
“There’s no way to do that,” said McSweeney.
However, the hospital can use an ad-valorem tax for sell general-obligation bonds to fund capital improvements. For example, Measure C, the ballot proposal to build a new $148 million hospital that failed in May, 2006, would have established an ad-valorem tax.
Theoretically, the hospital help could fund its operations through a sales tax.
But McSweeney said that a sales tax is regressive. Poor people would pay a higher percentage of their income than would the well-to-do.
And from a practical point of view, he said a sales tax would have to be at 1.25 to 1.5 percent to generate the $3 million a year subsidy that the hospital seeks. McSweeney said that rate of sales tax would never get the two-thirds support required from voters.
“I don’t see it,” McSweeney said. “That’s unprecedented in California for any kind of (special) district. Nothing’s over half a percent.”
Gary Hicks, a financial advisor for California hospitals and healthcare districts, said that a parcel tax to fund operations is the only practical option for the Sonoma Valley Hospital.
“That’s all they can do,” said Hicks, whose business is G.L. Hicks Fund, L.L.C.