DeKalb lawmakers might raise taxes to help save Grady
by Andy Phelan
Andy@dekalbchamp.com
DeKalb Financial Director Michael Bell for the first time briefed commissioners in public Aug. 28 as to what saving ailing Grady Hospital might look like to county taxpayers.
“You might have to raise the millage rate for the hospital fund,” said Bell. “It doesn’t look rosy right now.”
The “distressed” outlook is based on limited county reserves that, coupled with a property tax assessment freeze and less sales tax collections, allow less wiggle room as county lawmakers try to help save Grady from its impending fiscal crisis.
“There will be a good bit of pressure to raise the millage rate because of the property assessment freeze in ’08,” said Bell, while emphasizing that it is critical other counties and the state become involved in solving Grady’s funding crunch.
Today, DeKalb homeowners pay nearly nine-tenths of a mill for Grady, which collectively is equal to the about $22 million a year. Bell suggested commissioners might have to raise it to 1.5 to 1.7 mills, depending on how much and what type of help the hospital needs.
That means the owner of a $150,000 home would pay about $20 more a year, which would be added under hospital category in the county government portion of their tax bills.
Earlier this summer, a Metro Atlanta Chamber of Commerce task force reported that Grady will be $120 million in debt by the end of 2007 and could be forced to shutter its doors if it does not find alternative sources of funding.
Because the number of underinsured, uninsured and charity cases have skyrocketed over the past several years while county funding levels have remained flat, the hospital continues to “burn cash.”
In just the last year alone, Grady spent $73 million more on charity cases and received $60 million less in Medicare reimbursements.
As part of a short-term fix, Grady officials asked Fulton and DeKalb commissioners for $20 million this fall in addition to the $100 million plus a year the counties already pay.
The Fulton-DeKalb Hospital Authority Board of Trustees, which runs the troubled system, also voted Aug. 21 to pursue a $100 million loan to help keep Grady Hospital afloat.
First, Bell told lawmakers that although DeKalb does have two AAA credit ratings, “We don’t carry big reserves,” he said. “We only have about $21 million.” And while that sounds like a lot of money, Bell said the county is trying to keep $50 million in reserves so it has a one-month fund balance on hand.
Bell also told commissioners they must back any loan the Hospital Authority seeks, whether it’s $60 million or $100 million.
In a worst-case scenario, one in which the hospital could not pay back the loan, DeKalb taxpayers could be asked to pay anywhere from $10 million to $1 million more a year for the hospital, depending on the amount of the loan and over how many years it is paid back.
Grady officials are also considering using its more than $1 billion in real estate holdings as collateral for the loan.
Although Fulton lawmakers agreed to release $5 million in additional funds to Grady on Aug. 3, Bell told DeKalb lawmakers just because they are committed to funding Grady at a 27 percent level, it by no means obligates them to throw more cash at the hospital.
“Fulton’s additional commitment is a mid-year adjustment,” said Bell. “Our lawyers don’t think that makes DeKalb obligated.”
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