Hospital leaders seek support

Initiative would allow facilities to incur debt without voter approval

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COEUR d'ALENE - The CEOs of local public hospitals are on the campaign trail.

Kootenai Health's Joe Morris and Mike Pruitt from Shoshone Medical Center are urging voters to support a November ballot initiative that will amend Idaho's Constitution regarding funding for building projects and equipment purchases.

The measure, House Joint Resolution 4, would allow public hospitals to incur long-term debt to finance such projects without voter approval - provided no property tax revenue is used to repay the debt.

"It restores the way we've operated for 30-some years," Morris said.

The section of the state's Constitution prohibiting public entities from entering into long-term debt without voter approval was not applied to hospitals until 2006, when it was re-interpreted by a Supreme Court case.

Morris said Kootenai Medical Center was built during that time using revenue bonds, not taxpayer dollars, and was paid off in full by 1995.

The constitutional amendment is being sought to eliminate ambiguity in the existing section of the Constitution, and restore flexibility to hospital funding for building and equipment.

Steven Millard, president of the Idaho Hospital Association, said opponents of HJR4 claim the measure takes away the public's right to vote, and does not protect citizens.

"We think this protects the public more. One of the alternatives would be for the public hospital to increase property taxes to pay for their project, pay for their equipment," Millard said.

Larry Spencer, a Kootenai County property owner and local opponent of HJR4, believes the public should be allowed to vote on the measure regardless of whether property taxes are involved.

"The citizens have to pay for those projects through the cost of medical care, higher insurance premiums or higher out of pocket expenses," Spencer said.

Spencer said that without public oversight, hospitals could build "more extravagantly" than necessary.

"A project that is needed that could cost $10 million could become an $80 million project without voter approval," Spencer said.

Millard pointed to part of the amendment that is not included in the ballot language, but considered significant.

"It says the full faith and credit of the state, any taxing entity, is not on the line if there is any default in these kinds of arrangements, and the other part it's only if non-taxpayer dollars are used to repay the debt,"

Morris said default should not be a great concern since Idaho public hospitals have been responsibly borrowing money and financing projects this way for years.

"Public hospitals have borrowed $418 million through the Health Authority since the early 1970s, and it's all been paid back with no defaults and no late payments," Morris said.

The Idaho Health Facilities Authority is an agency created by the Idaho Legislature in 1972. Its mission is to help eligible nonprofit health care providers obtain low cost, tax-exempt financing. The authority's board is appointed by the governor.

Spencer believes that regardless of the amendment language prohibiting the consequences of default from falling to taxpayers, the citizens are still at risk of losing buildings and property originally funded through taxes if foreclosure should occur.

Shoshone Medical Center head Mike Pruitt said that although opponents of HJR are well-intentioned in wanting to cut costs for taxpayers, "This has unintended consequences which are very devastating to small, rural facilities."

He said he can't wait months for an election to finance something that costs up to several million dollars, and is essential to the operations of the hospital.

Spencer contends items necessary to sustain life or hospital operations would be considered "ordinary and necessary" expenses under the existing article of the state's constitution, and hospitals would not be prohibited from incurring debt without voter approval.

He said hospitals would simply have to ask a judge to approve it, and he doesn't believe such a request would ever be denied.

Hospitals like Pruitt's in Shoshone County, would still have to wait for the judge's signature, and spend whatever time that takes with no guarantee of approval.

Pruitt said time is a factor because in a situation as he earlier described, patients are put at risk.

"While it's not far to get to Coeur d'Alene, it's a long ways to hold your breath, if you really want to get it in a nutshell," Pruitt said.

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