If county voters don’t approve a proposed health care sales tax on the November ballot, and the Canyonlands Care Center can’t find another reliable funding source, the facility will be forced to close its doors.
That is the message that the care center’s governing board is sending to the local electorate, ahead of the Nov. 8 general election.
“In effect, we’re saying it almost as a fact, that if the sales tax doesn’t pass, our job is going to be to go through this orderly shutdown process, and I think it’s important that people know that, because if it is a fact, it’s a crucial fact,” Canyonlands Health Care Special Service District (CHCSSD) Board vice chair Doug Fix said during the board’s meeting on Thursday, Aug. 25.
Fix conceded that the statement also sounds like a “threat,” but he said he doesn’t see a way to soft pedal the financial situation that the care center is facing, after a sharp drop in funding from mineral lease revenues.
“In the election context, we can’t pretend that’s not true,” he said. “People, unless they believe you, are going to think you’re blowing smoke.”
The proposed tax would raise an additional penny for every $2 – or 50 cents for every $100 – that residents and visitors spend on goods and services, excluding gasoline and “groceries used in food preparation.” It’s unclear if the tax could be imposed on, say, potato chips that are added to salads or other unusual recipes.
In addition to funding the care center’s operating expenses and other costs, portions of the tax would go to Grand County Emergency Medical Services (EMS), which currently faces a projected shortfall of $480,000.
Neither entity receives any money from Grand County’s general fund, although both have benefited until recently from county allocations of mineral lease revenues.
The payments are staggered out over an 18-month period, so the district didn’t feel the immediate effects of the dropoff after oil prices tanked in late 2014, and oil and gas operations near Moab slowed down considerably. But once that period ended, the health care district’s share of mineral lease revenues plunged from more than $1 million during the previous two years, to an estimated $250,000 to $300,000 this year.
Grand County Republican Party chair Curtis Wells called the proposed increase “another painful reminder” of the county’s inability to exercise sound financial planning.
“While mineral commodity markets are down due to over-supply, Grand County hasn’t done itself any favors with local industry,” he said. “We’ve taken an overly aggressive stance against mineral production within our county.”
Change to state law makes proposed tax possible
The proposal only made it onto the upcoming ballot after the district successfully lobbied the Utah State Legislature, which passed a law in 2014 that allows district-owned care centers in the state to pursue the tax.
Between then and now, extra mineral lease money gave the district a stay, so the district kept building its reserves until it could come up with a “well-orchestrated proposal” for a tax increase.
“I don’t think anyone thought it made sense to go asking for a sales tax when we were flush with money for a little while, even though I think nobody expected it to last,” Peterson said. “(They) also didn’t expect it to drop so precipitously.”
During that time, the district and the care center’s administrators worked to improve the facility’s operations, while diversifying its revenue sources.
One of their biggest efforts paid off this summer, when state inspectors spent three days auditing the care center’s operations, and then declared that it is “deficiency-free.” That’s a status that only 7 percent of 88 long-term care facilities in Utah received within the last year, according to Canyonlands Care Center Administrator Kim Macfarlane.
In other good news for the facility, every one of its 36 beds is currently filled, and it even had a five-person waiting list as of late last week. Macfarlane is also hoping to work out a contract with the Veterans Administration (VA) that would bring more residents to the care center, even though it doesn’t have the space to accommodate them right now.
Just last week, the board voted to raise the rates that the care center charges its private-pay residents, who occupy about one-third of the beds at the facility. Beginning in October, those residents will see their rates climb over a five-month period by an extra $10, from $220 per day to $230 per day.
However, Fix said that without other dedicated sources of revenue to make up for the loss in mineral lease money, he doesn’t see a feasible way to keep the facility afloat over the long term.
“It’s always going to cost us a little more, but I think the bottom line is it’s not bad management and we’re not missing revenues and we’re not spending too much,” he said. “It’s just, the business model doesn’t work without a subsidy.”
CHCSSD board member Melody Sakrison repeatedly questioned whether the board should use “fear” tactics in its appeal to voters. Instead, she said, it should make the case that residents should vote in favor of the proposal because they want the care center in their community.
Fix said he remains hopeful that voters will feel that way when they cast their ballots this fall.
“I think we all want to be really upbeat about this and believe that the community will come through,” he told the Moab Sun News.
But in response to Sakrison’s comments, he countered that he would have come up with an even “harsher” statement than the one that Peterson and others drafted.
“I don’t want people coming back later and saying, ‘Geez, I would have voted for it if I knew you were going to close,’” he said.
The proposal is one of two proposed tax increases that will appear on voters’ ballots this fall.
The Grand County Board of Education is asking voters to approve a 0.001 percent levy to gradually bring employees’ salaries in line with the state average, while boosting support for academic programs. The levy would roll out over a five-year period, translating to an increase of 0.0002 percent each year.
Both proposals follow previously enacted tax hikes, including a 47.18 percent increase in the Grand County Cemetery Maintenance District’s certified property tax rate, and a voter-approved transportation sales tax on non-food items to pay for improvements to local streets, sidewalks and paths.
Wells questioned why local elected leaders continue to propose tax increases, even as poverty rates are climbing in Grand County.
“We’re not going to tax our way out of poverty and into financial stability,” he said. “Every one of these tax increases is being sold in a vacuum, but at this rate, our current trajectory is unsustainable. You can’t keep reaching for the people’s back-pockets and also provide upward mobility … I’m very disappointed to see multiple tax increase proposals on the ballot every year.”
Fix said he understands the concern that voters will find their tax loads to be too much, but he said he hopes that the health care district can make the case in support of the increase.
If voters approve the proposal, it would be imposed for a 10-year period, and could be extended for another 10 years, assuming that Grand County’s population does not increase significantly.
In the event that they reject the increase, the county will nonetheless continue to be on the hook for $370,000 per year in construction bond payments, according to the district’s statement to voters.
Under that scenario, Fix said the board will “immediately” approach the Grand County and Moab City councils with the hope that they will chip in with dependable funding sources.
“There is a limited time period after the election, but things would have to happen quickly,” he said.
Peterson said she’d like to sit down with a bigger group and discuss possible options to keep the facility open.
“We might want to put it out to private business,” she said. “Maybe there is someone who would really think that they could make a go of it, and I think we should try to hear someone out.”
Peterson ultimately acknowledged that the reality of that happening is “very slim,” and Fix said he doesn’t see another realistic alternative – although he said he’d gladly listen to any proposals that come up.
Over the last four years, Fix said, the board has heard at least half a dozen offers to run the facility. Yet experts have said that private businesses will never step in because the model in a small and remote community like Moab won’t pan out.
“We are truly a provider of last resort,” he said. “There’s no white knight private business who I think can come in and even come close to making this facility work, the way it’s set up.”
“If I could see any feasible way that we could proceed if this election fails, I’d be banging a drum, but we’ve spent four years looking at every possibility,” he added. “We’ve had businessmen, nonprofits, for-profits, big companies, small companies – and they all come in with a big smile … and then they start looking at the actual situation and they go, ‘No.’”
Tax would be a penny on every $2 worth of applicable goods and services
We are truly a provider of last resort … There’s no white knight private business who I think can come in and even come close to making this facility work, the way it’s set up.