Maverick County Hospital District Board approves $8 Million 2016-2017 Operating Budget in Split Vote at Workshop

By: Miguel Munoz, Eagle Pass Business Journal, Inc., Copyright 2016

The Maverick County Hospital District Board of Directors approved an $8,052,027 (million) Operating and Capital Equipment Budget for the upcoming 2016-2017 Fiscal Year at a Budget Workshop held on Tuesday, August 16, 2016 by a split vote of 3 in favor and one against.

Voting in favor of the $8,052,027 Operating Budget for 2016-2017 were Secretary-Treasurer Humberto Duran, who made the motion to approve, Vice-President Ronald Hixson, who seconded the motion, and President Juan Manuel Farias while Board member Ricardo E. Calderon cast the only dissenting vote.

Calderon stated that he was voting against the proposed $8,052,027 Operating Budget for several reasons, including that under the Texas Open Meetings Act the Board could not vote and approve an agenda item such as the operating budget when the public notice posted was placed as a “Notice of Budget Workshop,” not as a Board meeting; that any vote on the proposed budget under the public notice posted as a “Notice of Budget Workshop” was void and null; and that he did not want to participate in any violation of the Texas Open Meetings Act.

District Chief Executive Officer Terri Contreras advised the Board that she had spoken to the District’s General Counsel, Alex Fuller of Georgetown, Texas, regarding the posted agenda and that he advised her the public notice posted as a “Notice of Budget Workshop” was in compliance with the Texas Open Meetings Act.  Fuller was not present at the Board’s Budget Workshop.  Calderon replied that had the public notice been posted as a “Notice of Budget Workshop and Meeting,” the notice would not be in violation-but it was not posted as such.  The local Hospital District Board proceeded to vote and approve the proposed budget.  The Board’s approval could possibly be challenged by a taxpayer.

Calderon also opposed approval of the $8,052,027 Operating Budget for 2016-2017 because it is based on the Maverick County Appraisal District’s huge real property evaluation increases for 2016-2017 which unfairly and unconstitutionally raised the property tax burden of poor, working and middle-class taxpayers instead of the high income taxpayers.  The increased tax evaluations cause a disparate impact on lower income taxpayers.  Calderon noted that taxpayers in the North Heights subdivision along Comal, Colorado, Trinity and Medina Streets-an older and working class neighborhood-had their real property appraised at $4 per square foot while the affluent and higher income neighborhood of Rio Road had their real property appraised at less than $4 per square foot.  Calderon noted that it is unconscionable for a real property on Trinity Street or North Heights Subdivision be appraised higher per square foot than on Rio Road.  Calderon noted that real properties in Las Brisas Subdivision and Elm Creek Subdivision received 50% to 100% ad valorem tax appraisal evaluations increases while more affluent subdivisions received significantly lower increase rates.

Calderon proposed to remedy the inequity by reducing the Hospital District’s proposed 2016-2017 Operating Budget by 6.39%, the total increase of the Maverick  County Appraisal District’s 2016-2017 ad valorem tax evaluations, or, in the alternative, decrease the District’s tax rate from .09 cents per $100 valuation to .08 cents.

MCHD’s Tax Assessor-Collector Nestor Bonilla stated that the District will receive $175,347 additional tax revenues in 2016-2017 than this year due to the Maverick County Appraisal District’s increased ad valorem property tax appraisals for 2016.  Calderon suggested the District then reduce its proposed operating budget by the same $175,347 tax revenue increase.  The Board declined to do so.

Bonilla also stated that if the Board decreased the tax rate from 9 cents to 8 cents per $100 valuation as suggested by Calderon, the District would receive $253,984 less revenues than proposed.  Board President Juan Manuel Farias stated that such suggestions would require a decrease of services.  Calderon replied that the District needed to reduce its budget similarly to governmental entities elsewhere in Texas.  The Board declined to reduce the budget.

Calderon also recommended that the District create a non-profit corporation and spin off the perennially money losing Physician Specialty Clinic and fund said specialty clinic for one year to allow it to become self-sustaining instead of draining the District’s reserve funds.  The Physician Specialty Clinic is projected to lose approximately $600,000 for 2016-2017 according to the proposed Operating Budget, which the District will need to make up from other revenue sources or use reserve funds.  The District’s Finance Committee composed of Farias, Duran, CEO Contreras, and CFO Bonilla, however, are projecting an inflated increase of $1 Million in revenues to cover the Physician Specialty Clinic costs overrun.

The Board approved the proposed $8,052,027 Operating Budget for 2016-2017 in a 3-1 split vote.  Farias noted that the proposed Operating Budget is a balanced-budget for the first time without having to use the District’s reserve funds.

Other action approved by the Board included the proposed tax rate for 2016-2017 at the same rate of last year, that is, 9. Cents per $100 valuation by another split vote of 2-1 with Board Secretary-Treasurer Humberto Duran leaving the meeting early due to an electrical power outage at his place of employment.  Calderon first motioned to set the proposed tax rate  at 8 cents per $100 ad valorem valuation, but the motion died for a lack of a second.   Instead, Board President Farias motioned to set the proposed 2016-2017 tax rate at 9 cents per $100 valuation, which was seconded by Vice-President Hixson.  Farias’ motion was approved by Farias and Hixson while Calderon opposed for the same reasons stated by him during the proposed Operating Budget discussion.  Although the proposed 9 cents tax rate approved is the same as last year’s,  the District will receive an increase of tax revenues of $175,347 to work with thanks to the Maverick County Appraisal District’s record increased ad valorem tax appraisal evaluations for 2016.