On Sept. 21, the Grand County Commission approved the allocation of tax revenues to several special service districts within the county, which include crucial services like healthcare and waste collection. Funds are drawn from revenues created by mineral leasing, payment in lieu of taxes, healthcare sales tax and the transient room tax. Commissioners heard presentations and budget requests from districts at their last meeting. [See “Divvying up the budget,” Sept. 10 edition. -ed.]
Commission Administrator Chris Baird explained that mineral lease funds are royalties paid by extraction companies (oil, gas, or mining) operating on federal lands. The funds are distributed back to the states and municipalities where the extraction is occurring.
Baird noted that mineral lease funds fluctuate in accordance with the amount of extraction activity going on. Mineral lease funds may not be paid directly to the county, but must be distributed to special service districts, Baird said. How those funds are distributed is up to the county’s legislative body, which in Grand County is the commission.
Mineral lease funds come to the county in two distributions: one through the Utah Division of Finance, and one through the Utah Division of Workforce Services. The commission agreed to allocate DoF mineral lease funds with 57% to the Transportation Special Service District, 23% for the Recreation Special Service District, 10% to the Solid Waste Special Service District, and 10% to the Grand County School District.
For the DWS mineral lease allocation, 65% will go to the Recreation Special Service District, and 35% will go to the Solid Waste Special Service District.
Payment in lieu of taxes are funds paid by the federal government or state in place of property taxes that would otherwise be levied on those lands. Federal PILT monies are paid to the county’s general fund, but state PILT, for lands owned by state entities like SITLA or the Division of Wildlife Resources, must go to districts. Unlike mineral lease funds, which are tied to extraction activity, PILT payments are calculated based on acreage and population, and remain roughly the same from year to year.
The commission unanimously agreed that 50% of state PILT will go to the Emergency Medical Services Special Service District, 30% will go to the Recreation Special Service District, and 20% will go to the Grand County School District.
Healthcare sales tax
While healthcare sales tax revenues are expected to be higher than normal this year, their distribution among eligible local entities has been a sensitive issue in recent years and generated a lot of discussion both at the pre-meeting workshop and during the regular meeting.
The healthcare tax in Grand County is a 0.5% local sales tax on all transactions except food ingredients. It was implemented in 2017 and can be spent on healthcare centers and EMS. In the past few years, the revenues were split between the Canyonlands Health Care Special Service District and the EMS Special Service District, with 60% going to CHCSSD and 40% going to EMS. Last year, those entities went head-to-head over that split, with EMS asking to change it to an even 50/50 and CHC asking to keep it at 60/40. [See “Many voices ask for budget changes,” Sept. 3, 2020 edition. -ed]
The entities eventually agreed to keep the 60/40 split, with the county agreeing to allocate extra PILT money to EMS to make up the difference.
The two agencies have agreed again this year to a 60/40 split, but the issue is further complicated by a recent realization that healthcare sales tax can be used to make Disproportionate Share Hospital payments for Moab Regional Hospital. DSH is a federal program that compensates hospitals for uncompensated care they provide. If a locality can come up with a 1/3 match, the federal program will pay the rest. MRH could be eligible for a total of about $1 million if a local entity will pay $330,000 toward the match.
County staff had thought the county couldn’t directly pay healthcare sales tax revenues to the hospital, and so the Canyonlands Health Care Special Service District had been covering the Disproportionate Share Hospital payments up until last year. Mineral lease funding had been cut from the CHCSSD budget and they could no longer afford to pay the DSH; the hospital had to look for other sources for the local match. Now, however, the county believes it can pay the DSH directly.
The question commissioners wrestled with was how to pay the DSH this year. Should they take the $330,000 out of the healthcare sales tax revenue first, and split the rest 60/40 between CHCSSD and EMS? Or make the 60/40 split first, with an agreement in place that the CHCSSD would again pay the DSH?
The first scenario essentially spreads the burden of paying the DSH across both special service districts, while the second scenario would make the DSH the responsibility of the CHCSSD, as it has been in the past.
Commissioner Kevin Walker noted that, as Baird had reported, sales taxes have been much higher than expected this year, and thus the actual dollar amount of healthcare sales tax going to each entity is likely to exceed expectations.
“Currently we are at 147% relative to this same time in 2019,” said Baird. Comparisons to 2020, he said, are not helpful because the town was shut down in the spring.
“This is a very large increase, and probably mostly due to substantial increases in visitation,” Baird said. He’s made conservative estimates of what those revenues will look like for the rest of the year but noted the reality is likely to be higher than his projections.
“I’m hesitant to call any of this extra money,” said Commissioner Evan Clapper, reminding the commission that EMS is struggling to retain staff who are being recruited to agencies with higher wages, while call volumes are increasing and the district has had to spend extra money on things like ventilators and extra protective equipment to confront covid.
After much discussion, the commission voted to allocate 60% of the healthcare sales tax to the CHCSSD and 40% to the EMS, with an understanding that the CHCSSD would pay the $330,00 DSH payment.
Walker suggested that the commission may consider raising the healthcare sales tax in the future to its highest allowable amount of 1%. That move would generate more funding for the entities involved and alleviate the difficulty of allocating tax revenues among them.