The issue that many have about the ballpark is the process by which it was shoved down the community’s collective throats. The process bypassed the normal community discussion that a citywide infrastructure investment should have. Part of the discussion would have been whether the community could afford such an endeavor. The supporters of the ballpark continue to argue that the cost of building the ballpark will be borne by travelers to El Paso paying HOT taxes. However what is glossed over is that El Paso’s economy must be stable in order to offer a reason for business travelers to come to El Paso. Let’s face it; El Paso is not a tourist destination so the only true HOT taxpayers are the business travelers overseeing their investments in the city or looking to establish a foothold in the city.
The fact is that what the city is experiencing today with the Children’s Hospital and UMC is what the future debate about the ballpark will be. Look carefully at the debate about the debt owed by the Children’s Hospital to UMC.
The rhetoric emanating from Veronica Escobar and cohorts is that the debt is owed to UMC. The fact, though, is that UMC is a taxpayer funded entity and therefore the Children’s Hospital owes the debt to the taxpayers of the community. However, even this fact is not so simple.
When the argument to float the bonds to build the Children’s Hospital was being debated the proponents argued two things; the community deserved a Children’s Hospital and the hospital would be self-sustaining from the monies generated from its operations. The proponents argued that the Children’s Hospital would be an economic catalyst for El Paso, that it would attract medical professionals and that it would generate medical research.
Years later the community is faced with the unpleasant fact that the Children’s Hospital is not sustainable. The rhetoric revolves around the federal government changing funding policies that were not foreseen. Veronica Escobar argues that the solution is not through the taxpayers, however this ignores the simple fact that UMC is taxpayer funded and unless private monies are leveraged it will be the taxpayer the end up paying for the fiasco of the hospital.
In fact consider the following quotes from Veronica Escobar and you can see how the rhetoric is being framed for a future tax increase. In yesterday’s local paper, Escobar is first quoted as stating; “There are things that they [Children’s Hospital] need to do first before I would even consider, even have a conversation, about taxes”.
In yesterday’s paper, Escobar’s cohort, Vince Perez, is quoted as sating that he hopes that the Children’s Hospital and UMC “understand the urgency of the issue, and there is genuine willingness on both parties [sic] to make concessions”.
Both spend a lot of time creating the impression that they do not support a taxpayer influx to resolve the situation conveniently forgetting that any “concessions” made by either will result in the taxpayers funding it. And, “the things that they [Children’s Hospital] need to do first” involves the taxpayers as well, unless there is a secret pot of private money that the hospital has access to do that has not been made public. Because unless there is, it is the taxpayers that fund the operation whether it goes through UMC or the Children’s Hospital. Federal and state funds are taxpayers funds as well as both are fed by El Paso taxpayers.
As a matter of fact, in KVIA’s Ashlie Rodriguez’ report on June 11, look at how Veronica Escobar phrases her responses to KVIA. Escobar is quoted as stating that there are options that “Children’s should utilize”. She does not elaborate on the options but she gives us an insight. Escobar adds to KVIA that there are allegations that UMC is overcharging the hospital. This starts to set one escape arguments for a tax increase. The second and more important comment from Escobar is “trying to meet with state and federal leaders to see if they have any resources they can bring to the table to assist” the Children’s Hospital. Conveniently ignored in that rhetoric is that both sources are taxpayer funded sources. In essence she is promising that property owners will not be asked to help the hospital out.
What she leaves out is that taxpayers, through federal and state taxes are being sought to help out the Children’s Hospital and UMC.
In fact, Veronica Escobar is phrasing her support of the hospital with the argument that the community cannot afford to lose it. KVIA quotes her as follows; “It’s important the community understand what’s at stake if we lose Children’s, we stand to lose a lot”.
The public perception being manufactured is that we need to save the hospital and we are going to do it by UMC restricting the debt and us leveraging federal and state funds, proclaiming all along that the property owners were saved by her.
There is only one way that the taxpayer will be saved from bailing out the Children’s Hospital and that is selling it to a private hospital that would take over it. However that is unlikely as it does not make economic sense nor would Veronica Escobar and cohorts go for such a plan. Any other leveraging of federal, state or local government funds is nothing more than a taxpayer funded solution, and thus the taxpayers end up bailing out the hospital fiasco.
Notice one important fact of the Children’s Hospital as the debate intensifies in the next month or so. You will notice that the hospital will be referred to as a nonprofit entity partnering with the government. The nonprofit designation allows the supporters the ability to hoodwink the community and pretend that it is not a government entity. It allows the rhetoric that it is not a taxpayer funded entity to circulate within the community. However, more importantly is that the non-profit designation allows the hospital to operate outside of the government realm, yet partake of the taxpayers’ funds.
Remember that the city created a company to own and manage the ballpark. They did this because the government entity could not sell the bonds for such an endeavor so they had to get creative. And, thus we have a “corporation” owning property that uses the taxpayers’ of the community as the single asset the bond holders rely on to get paid.
All of this hinges on one thing; that the city’s economy remains sustainable in order to pay off the bonds. Very much like the Children’s Hospital and like the hospital there are already signs that El Paso’s economy is tanking.
On March 31, 2014, I published “El Paso’s Economy is Tanking”. In it I shared with you how foreclosures, a key economic indicator, in El Paso had doubled in February. Last Friday we found out that the foreclosure rate in El Paso again increased in May. This is a 30% increase from the same period last year.
While foreclosures in the US and in Texas decreased, foreclosures in El Paso have been steadily increasing.
Foreclosures is the single most basic indicator of a family’s economic stability as the home is the last thing a family loses during economic strife. Rising foreclosures is the first indicator of a community’s economic downturn. As the rest of the nation’s foreclosure rate decreases, El Paso’s increases.
Furthermore notice how there was an economic summit in El Paso last week discussing the need to expand infrastructure to accommodate increased trade coming in from Mexico to the US. This trade is the single most important economic engine for the border region and while El Paso stagnates, New Mexico has been capitalizing on this trade by investing in infrastructure that makes sense, not on flights-of-fancy ballparks that are nothing more than playgrounds for the rich.
As if that wasn’t bad enough consider that the Wright Amendment is coming to an end later this year. Southwest Airlines, which is the largest airline serving El Paso has already announced a significant reduction in flights into and out of El Paso because of this.
Let’s see, reduced flights likely equals less travel into El Paso that translates into less hotel guests that translates into less HOT taxes.
Clearly you see where this is going.
As a matter of fact, tomorrow city council will be discussing selling $73 million in certificates of obligations to fund the city hall relocation as a result of the ballpark. Certificates of obligations are bonds paid for by the taxpayers that do not require voter approval. So you get to pay for them but you don’t get a say on whether to sell them or not. So much for the ballpark not costing property taxpayers anything. Guess who pays for the certificates of obligations?
Oh, the rhetoric will be that this is only a formality because it has already been approved and besides, the city has already spent the money and it needs to reimburse itself. And, not one penny goes to building a new city hall that will soon be needed because remember that city hall is currently in multiple temporary locations because the city was in too much of rush to shove the ballpark down the taxpayers collective throats that city hall was moved to temporary quarters.
In the next thirty or so days you get a front-row preview of what the likely scenario is with the ballpark in the not too distant future. Keep a close eye on the Children’s Hospital and see how the politicians will pontificate about it not costing the taxpayers anything and how it’s the federal governments fault. In reality it will be the taxpayers that will end up paying for it.
You’re right again. And increased taxes will be the solution again. Ms. Escobar is already saying it is the State’s fault that both UMC and Children’s are not getting available federal (Medicaid) funding. Taking the extra federal money right now only obligates Texas to provide that increased funding later. Even if UMC and Children’s come to an agreement regarding what Children’s owes UMC, Children’s will have to pay its debt while continuing operations at a loss. The situation is similar to someone trying to pay a large credit card bill while continuing to spend more than they make.
What are HOT revenues (the extra 2%) now compared to the bond payment?
Even sadder is that our elected officials and hospital professionals have know for a long time about the reimbursement cuts and still they let this problem continue and allowed the hospital to rack up deficits. (see the article pasted below). The conspiracy portion of my brain is thinking that this was hushed up so UMC could book the (inflated) monies due from the Children’s Hospital and therefore make it seem that UMC was making money. But, wouldn’t hospital or government auditors have noticed the unhealthy piling up of debt?
Below is an excerpt from an article that (and this is funny!) is on the EP County Judge’s website. The article was written by someone from El Paso, Inc.
As you read this excerpt remember two things:
1) The people that did the feasibility study for UMC/Thomason are emphatic that the Children’s Hospital needs public money(taxpayers) or it will perpetually be in the red financially,
2) Read the last line. It is very prophetic.
“Why is it necessary that the children’s hospital have a separate board of directors, as well as separate administration and staff?
In a word, money.
When the children hospital’s governance becomes distinct from Thomason’s, it qualifies for preferential reimbursement from Medicare and the Texas Medicaid program.
Hospital officials estimate that designation will allow the children’s hospital to bring in an estimated $7.5 million in additional money.
The hospital will have to duplicate Thomason’s board, administrative officers and other services.
“But that’s a small price to pay for bringing in another $7.5 million. That’s a lot of money that isn’t here today to support pediatric care,” said Thomason CFO Rivera.
And that money is also essential for prodding a positive cash flow from the children’s hospital’s proposed finances.
Even with the additional Medicare and Medicaid reimbursements, the children’s hospitals net revenues are not projected to cover operating costs. During the hospital’s first year, for example, revenues will cover only 78 percent of the projected costs, according the Salmon study. That will result in a $5.7 million operating loss. After that, the deficit is projected to close by one percent per year.
The only thing that saves the hospital from being a perpetual money loser are “non-operating” revenues like distributions of property taxes and other taxpayer allocations that pay for indigent care.
Of the nearly $45 million Thomason receives each year in property taxes, $3.9 million will be earmarked for operation of the children’s hospital, which also will receive nearly $8 million in other “non-operating” revenues.
“With those two figures that the hospital district will appropriately allocate to this venture, the children’s hospital will run $4.2 million in the black its first year,” Rivera said.
So what will keep the cash flow positive is taxpayer support.”
“As a matter of fact, tomorrow city council will be discussing selling $73 million in certificates of obligations to fund the city hall relocation as a result of the ballpark. ” Typical Martin. When the facts get in the way, just lie your ass off. While the council is voting on $73 million in COs, only $7.8 million of the money is related to City Hall relocation. Here’s the full list: http://agenda.elpasotexas.gov/sirepub/cache/2/wqrgyipln0p5qpl3el5pk03f/1985406162014123640609.PDF
Comments are closed.