Central Health board gives first OK to new tax rate, considers future revenue options

Central Health’s Board of Managers is preparing to set a higher tax rate. Its new property tax rate will be almost 10.8 cents per $100 of taxable value, which will translate to an increase of $66 per year for owners of homes with a taxable value of just over $500,000.

The board gave approval at Wednesday’s meeting for Central Health leaders to publish the intended new rate in notices ahead of an Aug. 14 public hearing that will precede the likely approval of the rate.

During a meeting of the board’s budget and finance committee also on Wednesday, board members turned their attention to the aggressive spending scheduled for the next six years to implement the health care district’s Healthcare Equity Plan. With an expansion of specialty services and increase in access, the plan is seeing the opening and improvement of new facilities and a substantial increase in full-time employees.

During the budget presentation given as context to the tax rate, board members learned the current reserves of nearly $550 million will decrease by nearly $100 million per year through the 2030 fiscal year, which is the furthest out that CFO Jeff Knodel was comfortable forecasting.

A chart showing the present tax rate and spending pace leaving Central Health with $129.1 million in reserves as of fiscal 2030, which would put the organization near the advised threshold of having cash reserves on hand to cover 120 to 150 days of operation.

That chart also showed three other scenarios with lower tax rates over several years, each of which resulted in even lower or negative reserves.

Patrick Lee, president and CEO of Central Health, said the board and other Central Health leaders need to plan for the future to avoid going below the “hard deck” of zero reserves. With roughly 90 percent of the organization’s revenue coming from property taxes, Lee said consideration should be given to opening new revenue sources that could include patient service payments, federal health care programs, commercial services and philanthropy.

Earlier in the meeting, the committee heard the details on new and planned facilities in the Rosewood-Zaragosa and Del Valle communities that were part of the planned expansion of services for the area’s most vulnerable populations. The board also approved moving forward with an $11 million expansion of the Continuing Education Center.

“Looking at the spend down and the reserve strategy overall, it’s fascinating to me that for the first half sort of this creeping up roller coaster or the the climb of the roller coaster … that same conservatively budgeting and planning organization is the same one that’s going to be doing the spend down as well,” Board Member Amit Motwani said. “For that same organization to be charged with and successfully executing these two phases is fantastic.”

Because Central Health has a tax rate that is far lower than other health care districts in the state, Board Member Shannon Jones suggested the organization’s leaders should consider seeking a larger increase in the near future as a way to continue providing expanded service throughout the area.

“True, we are probably the only one without a hospital but the reality is that we also are one of probably the wealthiest counties in the state. The question of the ability to tax the burden of the citizens, should it not be more reflective of the wealth that’s there to support the population that is part of that versus just some kind of formula?” he said. “I don’t think that’s a question that we can answer right now but I put it out there for a discussion because all Travis County is becoming wealthier and wealthier and yet our our burden of financing is not, in my view, being consistent with that.”

Photo by Larry D. Moore, CC BY 4.0, via Wikimedia Commons.

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