Health Care Sales Tax Would Be Boon for Big Business

On Tuesday, the Manatee County Commission will again vote on a date for the proposed referendum on adding a half-cent sales tax to fund indigent care programs. The convoluted plan would replace funding that is set to expire from county proceeds in the sale of Manatee Memorial with the sales tax revenues, while promising to lower property taxes. It's advertised as revenue neutral, but when one considers the savings for commercial enterprises – who don't pay sales tax – it can be seen as a massive shift of cost burden.

Let me say first that I wholeheartedly support funding programs that expand access to healthcare to as many people as possible, especially when it focuses on preventative care, which can greatly reduce future costs. But I also support good government and I don't think that the two are mutually exclusive. A ham-fisted plan to expand care can easily do more to set back the sort of systemic reforms we truly need than a good one can to help, so it is important that we get it right.

I've already questioned the idea of trying to implement something of a parallel program at the exact same time that the public health care system is experiencing its most profound changes in at least 100 years. Commissioners can hem and haw over Obamacare and whether the expansion of Medicaid will solve the county's indigent care problem (though the greatest roadblock to that happening is the Florida House's commitment to turning down federal monies), but the idea that you can adequately formulate the costs of a local plan before that has been sorted out doesn't seem possible.

County Administrator Ed Hunzeker has said repeatedly that the plan can be adjusted as often as necessary to accommodate such changes, but the real focus should be on the idea of whether we should be creating a new tax in the first place, and then whether the plan that is being proposed is the best idea. Regardless of arguments that the proposal is revenue neutral, the fact remains that right now there is still a giant pot of non-tax revenues (the corpus), which in two years will no longer exist.

Discussion of the proposal always assumes that the same amount of money would be spent once the corpus is drained, with general fund monies simply replacing what comes from the hospital sale proceeds now. But there is nothing that says the county must fund such care at all, let alone in the manner in which it currently does. Manatee Memorial Hospital is owned by a large and very profitable company. It can turn away indigent emergency room arrivals, but then it would not be able to accept Medicare, which is too much revenue to even consider.

So by having the county tax residents and then transfer some of that money to their coffers, it clearly helps their bottom line. But shifting the cost away from the general fund and toward a sales tax puts a little sugar on top. As an enormous commercial enterprise, Manatee Memorial will profit again by the reduction of property taxes – much more so than the typical homeowner, who also has much of their reduction offset by increased sales taxes.

That represents still another aspect of the proposal that has yet to be discussed. More than a fifth on Manatee County's property tax revenues come from commercial properties. By reducing property taxes and increasing sales tax, the county will shift the cost burden for indigent health care away from big businesses and toward the average Joe, making an already regressive tax more so.

Considering that the new tax, which is projected to generate $23 million in revenue, has to pay for all of the health care funding covered by the corpus before it can offset property taxes, the average savings to the individual homeowner will be relatively small, especially when you account for the increased cost at the cash register. But for Manatee Memorial, who paid over $2 million in property taxes last year, a slight decrease in millage goes a long way.

FPL, who was Manatee's number one property tax payer in 2012 at nearly $12 million, will also see a pretty penny, as will Mosaic, Verizon, Tropicana and other businesses that have seven-figure property tax bills to contend with. You can make the argument that lowering such costs will make Manatee more business friendly, but to do so you have to acknowledge that the savings for these profitable, multi-billion dollar corporations are carried on the backs of average citizens.

As Commissioner Michael Gallen noted this week, finding a more cost efficient way of providing indigent care should be the primary focus. Asking taxpayers to fund a program before they know that their money will not be squandered by paying exorbitant emergency room fees to profitable private hospitals, alongside a promise that the plan can always be improved later, is not a winning proposition.

Dangling a property tax cut might make it sound more appealing, but at the end of the day, this is a cost shift that presumes taxpayers should pick up the tab to keep funding an inefficient system of localized indigent care, just because the old funding source is going to expire. That's a lot to ask them to agree to when many of them will already be paying more to expand Medicaid whether they like it or not.

Dennis Maley's column appears every Thursday and Sunday in The Bradenton Times. He can be reached at dennis.maley@thebradentontimes.com. Click here to visit his column archive. Click here to go to his bio page. You can also follow Dennis on Facebook.