Hidalgo County Proposition 1 Explained

Proposition 1 as it will appear on the Official Ballot, as presented on the 8/9/16 Hidalgo County Meeting Agenda.

Make sure to make it to your designated polling place on Election Day, Nov. 8, as it is time to vote not only for our next president, but on a local measure that could have lasting effects on the Rio Grande Valley. Proposition 1 on the ballot calls for the creation of a local healthcare district, a modified version of 2014’s “Hospital Tax District” which voters did not pass by a margin of about 2,000 votes. The new measure is up for election again after a petition was signed by the necessary minimum of 50 registered voters of Hidalgo County.

Despite the hundreds of campaign signs lining the commercial and residential streets of Hidalgo County, information about the new proposal was unclear until October 18, when Futuro McAllen hosted a forum to allow both sides to present their arguments to the electorate. David Girault, chief financial officer of B2B CFO, provided a synopsis of the proposition before representatives spoke.

“We wanted to provide the basic information we’ve received from the Hidalgo County Health Department and some research we’ve done independently at Futuro McAllen to let you know how things work now and how things may work if Prop 1 passes,” introduced Girault.

(Futuro McAllen is a non-partisan organization.)

As Seen on the Ballot:

Proponents of the bill have spoken generally about the benefits, including expansion of indigent care (medical care for the very needy) and the education of medical specialists to treat the RGV and boost our standard of care. However, the ballot language reads as follows and does not make mention of indigent care:

“The creation of the Hidalgo County Healthcare District, providing for the imposition of an ad valorem tax on all taxable property in the district. The initial ad valorem tax shall be imposed at the rate of eight cents on the $100 valuation of all taxable property in the district. District funds shall be used for district purposes, including improving health care services for residents of Hidalgo County, supporting the School of Medicine at The University of Texas Rio Grande Valley, training physicians, nurses and other healthcare professionals, obtaining federal or state funds for health care services, and providing community health clinics, primary care services, behavioral and mental health care services, and prevention and wellness programs.”


Indigent Care

Girault explains that all counties in Texas are mandated to provide care to its indigent residents if no hospital district exists. “I emphasize indigent for a reason – that is a legal definition,” said Girault. “It requires residency in the county, and there is an income standard – below 21 percent of the federal poverty line. That’s approximately $5,000 per year for a family of four.”

The minimum eligibility is set by state law, and is not something the county has discretion to go below. By statute, the county is obligated to provide basic healthcare up to a maximum of $30,000 per person per year. These facts were presented at the McAllen Convention Center the night of the forum and made available to remote audiences via a live stream: In the 2015-16 fiscal year, the county allocated $5.5 million for indigent care program specifically and another $1.45 million for administration of the program, or about .023 cents per $100 valuation.

There were 7,749 applicants of which 67 percent were served. The total spent was $9.1 million. Here Girault stopped to break down the math – how we spent $9 million when we only had $5 million. “That’s the trick of the federal government,” he said. “The 11/15 waiver is a waiver that the government allowed as part of the implementation of the Affordable Care Act. It allowed states to draw down medicaid funding as a match to their local spending.  This year it was about $1.36 for every dollar we spent. The county set aside 5.5 million, that 5.5 million was allocated to the state in exchange, for which the federal government returned about 13 million – 12.98 million.”

Girault explained that prior to the 11/15 waiver, there existed a law by which the county is required to spend a certain amount of its budget on care and the state would match 90 cents to the dollar, but it has since been defunded by the state.

Continuing to explain the numbers, Girault said that the excess over the 9.1 million went to care, but not only indigent care; some of the funds also went to uncompensated care, which accounts for about $100-120 million annually in Hidalgo county.  He illustrated two scenarios in the emergency room that are considered uncompensated care:  The first involves a person who is not indigent, but medically uninsured. “If they don’t pay cash, that is uncompensated care,” said Girault. “If someone is insured but don’t pay their part of the bill, that’s also uncompensated care.”


Looking at Existing Healthcare Districts

Before getting into detail on the proposed hidalgo county healthcare district, Girault spent some time explaining how existing healthcare districts around the state operate.  “Austin Central Health levies a 11 cent tax, and it functions similarly to how we anticipate ours to function although there are some unique differences – not least of all the difference in taxable value of Austin compared to Hidalgo county,” he said. A major difference is that Austin’s healthcare district does not have any hospitals or clinics that they operate directly. Instead they take their money and draw 11/15 money to match and pay for services through their local providers.

An infographic in the presentation to be made available on the Futuro McAllen website shows the programs and costs of various large healthcare districts in the state. “By population, this is the company we keep,” says Girault. He listed other districts that pay 17, 23, 28 cents per $100 valuation. “Many of these operate full blown hospital systems, in many cases with multiple facilities and hundreds of millions of debt financing for these facilities.”


The District as Proposed
As explained point by point by Girault with the next slide in a powerpoint presentation, the commissioners court was obligated to call for this election having received the 50 signatures on a petition calling for an additional tax to fund the healthcare district set at an initial rate of .08 per $100 valuation. (In 2015, the tax rate in Hidalgo county was $.59 per $100 valuation.)

The proposed health care district would be governed by ten appointed board members: five appointed by the county (one each by the county judge and four commissioners), 2 by McAllen and 1 each by Edinburg, Mission, and Pharr. Directors are limited to three three-year terms.  Board directors receive no compensation but they can be reimbursed for out-of-pocket expenses. The proposal includes no provision for the removal of a board member. “Large districts have their own statutes for boards, and some have provisions for the removal of a board member. For example, if they miss more than half of board meetings they may be excused from the board,” said Girault.

The Commissioner’s court must approve the budget, however it was revealed over the course of the forum that the budget plan has not yet been determined. “Before the board adopts a budget they must conduct a public hearing that is published in the newspaper, and they must allow the public to attend and comment at the public hearing,” explained Girault.  “After they adopt a budget it must be approved by the commissioner’s court before it can take effect.”


Powers of the District

Girault explained that the proposed healthcare district’s powers are fairly consistent with the powers of other large healthcare districts, with some exceptions.

If created, the healthcare district would take full responsibility for providing medical and hospital care for indigent residents; the district would replace the county as being responsible for indigent care.  The district can employ various types of medical professionals and purchase, build, or operate clinics or hospitals. A board adopts rules for operation of the district and duties of staff.  The district may also operate other medical providers such as emergency medical services, home health, long-term care, skilled nursing, intermediate nursing, or hospice care.

The district may borrow funds on long or short term basis. It can issue both revenue bonds and tax bonds. The district has the power to loan or grant money for development of medical education or research – in our case fund portions of the UTRGV medical school and residency programs. The district can also create or sponsor a non-profit.

These are two differences from other districts, which are not specifically authorized to operate other services like home health, skilled nursing and etc, or to loan grant money for development of medical education and research.

The current proposal also differs from other districts in that it does not include a provision allowing for the creation of an integrated health system.

The proposed district has eminent domain power. This is defined by Cornell University Law School’s Legal Information Institute as “the power of the government to take private property and convert it into public use. The Fifth Amendment provides that the government may only exercise this power if they provide just compensation to the property owners.”


Taxpayer Protections
Taxes of the proposed district are subject to rollback elections as per the rules of the tax code. If the tax is increased by more than 8 percent, that would trigger the potential of a rollback election, explained Girault.  “If we’re looking at that 8 cent tax and assuming a flatline appraisal district valuation (which we know hasn’t been the case, but to make the math easier, assume its flat), that’s about 3/4 of a cent ($0.0064/$100) tax rate or above that could trigger a rollback.” Seven percent of registered voters are required to sign a petition calling for a rollback election, or 23,668 signatures.

The max tax rate is capped at 25 cents per hundred.  “Sort of,” said Girault. “The statute allows the board to call an election to ask the citizens to raise that rate above 25 cents and they have to designate what rate they want when they call that election.” If that election is successful then the cap raises.  The Texas constitution caps the rate at 75 cents.


It’s Up to Hidalgo County
Following the explanation of the proposal, Proponents Ann Cass of the Equal Voice Network and Dr. Hernandez (taking the place of Richard Garcia) along with opponents Mark Walker, a McAllen lawyer, and Commissioner Eddie Cantu had the chance to answer key questions from Futuro McAllen. The audience was encouraged to ask questions through social media, though the hour-long forum was not long enough for all of them to be asked or answered.  However, the forum was a success in that attendees left with information they did not have before about the powers and responsibilities of the proposed health care district. Having as many facts as possible with which to make informed decisions will no doubt help voters on Nov. 8, 2016.

Public participation in our local government is vital for the flourishing of our region, and RGVision Magazine aims to share the best of the RGV. Look for our Nov/Dec issue online at rgvisionmagazine.com or on the stands for a detailed look at the comments exchanged that night, as well as input from local leaders on this issue.  

You can watch the Futuro McAllen forum described above in its entirety here.