On June 18, Manatee County voters will vote on two questions that are loaded with big tax consequences.
On the surface, the questions appear straightforward and easy to comprehend. But to paraphrase the adage, the details matter — a lot. Over the next two weeks, we will address on this page the details of both referendum questions. They’re not just Manatee County questions. The election results have implications for Sarasota County, as well. This week, we focus is on the indigent-care, half-cent sales tax.
First, let’s start by giving Manatee County Administrator Ed Hunzeker credit for leading this effort. Regardless of your position on this question, credit Hunzeker for being willing to stand up for what he believes is the right and to do so in the face of strong opposition. He’s not like many of the Washington bureaucrats we’ve seen lately who show no conviction to take responsibility.
What’s more, we’ll credit Hunzeker for looking to the future and having the courage to risk his job and reputation for what he believes is the greater good.
The trigger for this indigent-care half-cent sales tax starts with Manatee history. In 1984, the county sold its public hospital, Manatee Memorial, and used the proceeds to establish an indigent-care trust fund. In recent years, that trust fund provided about $9 million annually to provide medical and mental care to the needy. The largest portion of that amount goes to cover payments for patient treatment at Manatee Memorial — about $5.6 million a year.
On top of that $9 million, Manatee commissioners have allocated about $14 million a year from property-tax collections for similar needs — $23 altogether.
The largest portions of that $14 million have been spent on payments for patient treatment at Manatee Memorial, Medicaid matching funds and prison health services. Federal and state governments mandate the spending on the latter two. Prison health services cost about $5.7 million a year; Medicaid consumes the second-largest amount, about $4.7 million a year.
Dilemma: Paying for indigents
Here’s the dilemma Hunzeker felt compelled to address: In 2015, the money in the trust fund will be depleted. That presents the County Commission with tough choices: continue to fund that $9 million via another source, say, higher property taxes; fund a lesser amount via another source; or discontinue the $9 million funding altogether.
If it’s discontinued, what would be the consequences? What would happen to Manatee’s economy if that $9 million disappeared from health-care providers?
And if that money disappeared while the indigent still visited doctors and hospitals, who ultimately would pay — Manatee’s insured residents?
For Hunzeker, this sticky dilemma triggered a lot to think about.
To begin, Hunzeker did not want to foist that $9 million shortfall as a new property tax on top of the county’s existing property taxes. Manatee County’s property-tax millage rates already are more than twice as high as Sarasota County’s rates (see box at right). This is a big economic problem.
It’s an economic disincentive for home buyers and businesses. If you’re a manufacturer that needs 50,000 square feet to operate and you want to be competitive, where would you prefer to locate — where your taxes are $7 per $1,000 of assessed value or $3.15 per $1,000 of assessed value?
Hunzeker will tell you Manatee’s millage rate weighed on his thinking. Then, when Hunzeker looked closely at why Manatee’s millage rate is so much higher than Sarasota’s, he saw Sarasota’s dirty little secret:
Sarasota County government may have a lower millage rate, but Sarasota County government actually generates 16% more in revenues each year than does Manatee. And it does so through an assortment of fees that Manatee County does not charge (see table below). Altogether, Sarasota generates $388 million a year in fees — money that does not get factored into Sarasota’s basic millage rate.
Voila. Hunzeker’s answer came to him.
Rather than tap property owners to make up the lost $9 million, Hunzeker thought the county could adopt a half-cent sales tax. That would raise the county’s tax rate from 6.5% to 7%, the same as Sarasota’s. But as Hunzeker figured it, the half-cent sales tax could generate close to the entire $23 million the county currently contributes to indigent health care. Manatee’s taxable sales in 2012 totaled $4.325 billion. A half-cent tax would generate $21.6 million.
With that, Hunzeker expanded his tax idea into a comprehensive plan that he believes is salable to taxpayers. His grand plan attempts to accomplish a lot. It would:
1) Fund indigent health care with a half-cent sales tax, avoiding a higher property tax; avoiding the loss of $9 million in revenues from going to local healthcare providers; and thus allowing the county to discontinue its $14 million to indigent health from property-tax revenues.
2) Broaden Manatee’s revenue sources by adopting fees on utility franchises, stormwater and ambulance services, thus mirroring more closely other counties’ revenues.
3) Allow, because of No. 1 and No. 2, the county to reduce property-tax rates.
4) Make, because of No. 3, Manatee’s millage rate more competitive in economic development circles.
The skeptics’ doubts
The plan appears ingenious.
But as you might expect, there are plenty of skeptics and opponents. Manatee’s Tea Party leaders stridently oppose Hunzeker’s plan. And they do so largely on two counts: They don’t like the idea of a new tax (the half-cent tax); and they don’t believe the County Commission will lower property-tax rates even if the half-cent healthcare tax is approved. They don’t trust government.
Others are skeptical of Hunzeker estimates that tourists would pay 30% of the indigent health-care sales tax (i.e. $6.5 million of $21 million). Hunzeker says this is an accepted percentage in government circles. According to longtime Florida economist Hank Fishkind, the amount tourists would pay is more like 20%.
Still others cast doubts on Hunzeker’s literature that says if the half-cent tax is adopted, it could lead to millage-rate reductions of 13% for unincorporated property taxpayers and 26% for property taxpayers in Manatee’s incorporated cities. Says Hunzeker: “My budget proposal at the end of this month will include those reductions.”
The opponents’ rhetoric aside, Hunzeker’s plan is too complex for taxpayers. It reminds us of the song about the shin bone connected to the knee bone, and the knee bone connected to thigh bone. Without one of those bones, the leg falls apart.
In the end, Hunzeker’s plan is a net-revenue plan. The county’s money would come from new sources — higher sales tax, new fees; with the cost borne by different payers. City taxpayers would benefit most; unincorporated residents would see their property-tax millage rate fall, but they’d see new fees on their tax bill (franchise and stormwater).
That’s assuming, of course, everything falls into place. The County Commission would have to go along, including negotiate deals with utilities and figure out, say, a stormwater fee scheme. All of that would take a lot of time. There are no guarantees.
Here’s another biggie: If the indigent sales tax is approved, the county must enact a plan for how that money will be spent and administered. If you look at the health plan the way it’s written, you’re likely to reach this conclusion: It’s a bureaucratic blob.
Hunzeker has valid ideas. But our recommendation to voters today is call him and the county commissioners and ask them to pull the indigent sales tax from the ballot. The entire package needs more vetting.
Remember the fallen
Memorial Day was first observed May 30, 1868, when flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery.
Wounds were still deep, then. Southern states wouldn’t honor their dead on the same date as the Northern states.
After World War I, the holiday became a memorial not just to those who died in the Civil War, but to all Americans who died in any war.
Memorial Day also became the holiday symbolized by the red poppy. Moina Michael, a teacher, wrote a poem and dedicated the latter years of her life to spreading the red poppy as a symbol of remembrance. Wrote Michael:
“We cherish too, the Poppy red
That grows on fields where valor led,
It seems to signal to the skies
That blood of heroes never dies.”
Monday is Memorial Day. Remember the more than 1.3 million Americans who have died in nearly 60 conflicts since the American Revolution. Remember, too, all the victims of the Oklahoma and Midwest tornadoes.
MANATEE’S INDIGENT-TAX QUESTION
1) COUNTYWIDE INDIGENT CARE ONE-HALF CENT SALES SURTAX FOR HEALTH CARE SERVICES TO QUALIFIED RESIDENTS
Shall Manatee County levy a countywide one-half-cent sales surtax for a 10-year period commencing Jan. 1, 2014? The proceeds of the sales surtax shall be used to fund health care services for Manatee County residents, including elderly persons and children, who are indigent or medically poor. Such services shall include primary and preventative care by physicians, clinics, hospitals, mental health centers and alternative delivery sites in a cost-effective manner.