Wishard Referendum

Marion County voters are being asked to “co-sign a loan” for nearly three quarter of a billion dollars for a new hospital. There is little doubt that the old facilities are worn out; however, there is significant reason to believe that the hospital can’t repay the these bonds over the next 30 years as they claim. If they default on the bonds, the taxpayers will be stuck with the bill. This is a huge tax liability that wouldn’t be subject to property tax caps since it was voted on in a referendum.

The parent company of Wishard, Health and Hospital Corporation of Marion County (HHC), makes a significant profit on nursing homes outside Marion County. It is able to do this by leasing them back to a private operator in order to qualify for additional Medicaid payments (UPL) from the federal government. This arrangement and the additional payments aren’t likely to continue in a post health care reform environment. Mitch Roob, former HHC CEO and currently the state's chief economic development officer called the arrangement “a bit of a scam”. “It does not pass most people's smell test," Roob said. "It is legal, and I will tell you that it is that smell test that will eventually get them in trouble at the federal level".

Without that revenue, the responsibility for repaying the bonds falls on the taxpayers. If the hospital were truly able to finance the bonds out of their own revenue as they claim, then they shouldn’t need the taxpayers to guarantee the bonds. If it is as presented, the project could be financed with revenue bonds with the credit markets determining the creditworthiness of Wishard, not the taxpayers.

Wishard is a teaching hospital for a state school. It is a classroom for IU School of Medicine. Although IU benefits from keeping the hospital in close proximity to the school they refuse to commit their own money or loan guarantees to the deal. If Wishard should be rebuilt because of the value as a teaching hospital then IU should help fund it.

I’m not a rabid “No new taxes” person. However, Marion County taxpayers already bear the burden of a large number of regional facilities. There are some good arguments for a new hospital, but asking Marion County taxpayers assume all of the risk is simply unacceptable given the tax burden that we currently face. High tax rates will force businesses and middle class families alike out of the county.

Additionally, any referendum of this magnitude should make it clear the amount of bond issue, the potential impact on property taxes and that it would not be subject to property tax caps. This referendum mentions none of these things. If a bank were to do something similar it would be considered fraud.

It’s arguable that Wishard should be rebuilt. If so, it must be financed differently.

The Wishard referendum has all of the markings of a scam

It’s unfortunate, but the Wishard referendum has all of the markings of a scam. We are being told that we must “Act Now! – we can’t afford to wait!” We are being bombarded with emotional appeals but little hard data including the cost. We are being told to trust a circle of political insiders – but nobody has money in the project or is taking any risk except Marion County taxpayers. It turns out that the “Citizens for Wishard” is funded almost entirely by the IU School of Medicine. Even the wording of the referendum and calling a special election when there’s sure to be little turnout raises eyebrows.

This proposal should be soundly rejected by the voters- even if the project is a good one—for the above reasons. The voters deserve better for what will be somewhere close to a billion dollar project.

First, we should have a clear understanding of the costs. Right now those numbers are all over the map. There should be a “not to exceed” number. After the last couple of projects the public is in no mood to write a blank check. We should know that we are legally authorizing a bond issue as well as a property tax increase – beyond any property tax caps—to pay for those bonds. We should balance this project against the $5.3 billion of unfunded infrastructure needs that the city already has.

Second, if Wishard believes that it can pay for the bonds without a tax increase then we should hear that from a disinterested third party expert. There’s no reason that Marion County, independent of Wishard, couldn’t hire a bond rating agency to do just that. There have been arguments that Wishard can’t make the payments on the bonds for 30 years. I’m not an expert in municipal credit rating… but there are firms who are and the study should have been done already. Taxpayers should reject the proposal until they have that information.

Third, with all due respect to Officer Fishburn and other patients, we should not swayed by their appeals. We know that the hospital has saved lives. We should be less interested in what the hospital has done in the past as the need for the hospital over the next 30 years. By waiting a year we will have a much better idea of how health care reform will shape both the need for a “safety net” hospital and the ability to pay for it.

Lastly, this is a state teaching hospital. It is a classroom for IU school of Medicine. Indiana University should not expect Marion County to pay for their school. IU needs to put up a significant amount of money for the new hospital instead of funding a million dollar PR campaign to get Marion County taxpayers to foot the bill.

If this is a good proposal, it will be a good proposal in a year when we have the needed information and more voters can participate. Until then, we should vote “No” on Tuesday.