University Medical Center plans to cut tax rate, get $34.7 million federal relief funds from county
University Medical Center will likely adopt a lower tax rate for its next fiscal year after receiving a $34.7 million commitment in American Rescue Plan Act funds from the county — an allotment county officials hoped the city would help fund.
Hospital officials were initially considering adopting the same tax rate as last year to fund the hospital district’s approximately $1 billion budget, which would have meant an increase in property taxes for most El Pasoans. But the infusion of federal money means that on average, homeowners will not see a tax increase from the hospital next year.
The hospital district’s proposed new tax rate would be 25.8 cents per $100 of property valuation, down from last year’s rate of 26.8 cents.
It could spell some minor relief as other local taxing entities, including the city and county, work through the budget process ahead of the new fiscal year that begins in September for the city and October for the county. Tens of thousands of homeowners will see a large spike in city and county property taxes caused by a rise in home valuations that occurred during the COVID-19 pandemic and government decisions to not lower tax rates to compensate.
County officials were hoping the El Paso City Council would vote to approve sending a portion of its ARPA funds to UMC after the hospital joined forces with the city to aid in the COVID-19 vaccine distribution effort earlier this year.
Congress earlier this year approved rescue plan funds to provide $350 billion in emergency funding for eligible state, local, territorial, and tribal governments to respond to acute pandemic response needs, fill revenue shortfalls and support communities and populations hardest-hit by the COVID-19 crisis.
“It behooves them (and) it behooves the school districts for us all to sit down and put money on the table,” said El Paso County Judge Ricardo Samaniego. “We’re going into budget hearings, and will (have to) be extremely aggressive in making sure that we take care of UMC. If we don’t take care of them they won’t take care of us.”
According to the U.S. Department of Treasury, El Paso County will receive $163 million in ARPA funds and the city will receive about $154 million.
Samaniego said UMC and the county reached out to city officials, including City Manager Tommy Gonzalez and Mayor Oscar Leeser, to help cover an initial request from the hospital of $30 million, but have not gotten a clear answer as to whether the city will contribute.
City officials did not respond to an interview request from El Paso Matters, but city spokesperson Laura Cruz Acosta said in an emailed statement the city is working diligently to ensure they put together a strategic and fiscally responsible plan for the funding.
Acosta said the city has received the first $77 million, but is projecting more than $96 million in expenditures directly related to the ongoing pandemic health and safety response. She said that includes vaccines and testing, rental assistance, economic recovery and support to city services.
“Based on the city’s COVID-19 health and safety response needs, the virus’s evolving trajectory, the economic and workforce challenges, and the limitations and variability of the funding, the city is unable to use funds that are intended for our costs associated with COVID-19 expenses and revenue loss as those costs exceed our current allocation of $77 million and we have no funds left to allocate for any other purpose at this time,” Acosta said.
She said the city was also notified that the state of Texas will not provide resources to assist in the city’s response to future outbreaks and that city governments will instead need to utilize their ARPA funding.
County Commissioner David Stout said he thinks the city should put some of their ARPA money toward UMC.
“It seems to me that the city’s not going to be a good partner on this endeavor. They haven’t said yes (and) they haven’t said no,” Stout said.
Acosta said the city met with UMC President and CEO Jacob Cintron last month to discuss his request for additional financial assistance from the city’s ARPA funds, but has not received a written request outlining how the money would be used. She also said based on the discussion, the city is unclear on whether the request would be eligible for the funds based on “an effective date of March 3, 2021, forward for eligible expenditures.”
Acosta said based on the discussion, UMC mentioned expenditures that had already been incurred.
According to the U.S. Department of Treasury, eligible costs would have to be incurred between March 3, 2021 and Dec. 31, 2024, but recipients of the funds have broad flexibility within four categories.
The categories are public health expenditures, negative economic impacts caused by the public health emergency, replacing lost public sector revenue, and providing premium pay for essential workers and for investments in water, sewer, and broadband infrastructure.
UMC officials did not respond to El Paso Matters request for an interview, but spokesperson Ryan Mielke said in an emailed statement that “UMC and many other hospitals throughout our nation mounted a large and complex response throughout the current pandemic, which continues to this day.”
Mielke said the funds it will receive from the county will be used for Centers for Medicare and Medicaid advance repayments, anticipated 2022 Medicaid funding shortfalls, contract nursing labor, supplies and other COVID-19-related costs.
“These funds will take care of many of those needs. It is worth noting that UMC, in April 2021, exhausted all CARES Act funding while our pandemic response for our community and the associated expenses continue. UMC continues to make the best and most prudent use of its available resources,” Mielke said.
UMC officials said they had not allocated the $30 million ARPA funds into the 2022 budget because they did not have a commitment from either the city or county and did not directly receive ARPA funds.
In an effort to minimize the tax burden on property owners, El Paso County Commissioners Court asked UMC to adopt what is known as the no-new revenue tax rate if the county agreed to give them the ARPA funding. The county agreed to increase the ARPA commitment to $34.7 million to also cover the nearly $5 million shortfall the hospital would incur if it agreed to adopt the no-new revenue rate.
Betsy Keller, chief administrator for the county, said in an emailed response to El Paso Matters that the El Paso County Commissioners Court meeting Tuesday passed a motion to give UMC $34.7 million that will be paid in two separate payments of $17.35 million each. The payments will be used in compliance with the ARPA requirements, she added.
Acosta said the city, to continue collaborative efforts with UMC, proactively offered to take over their vaccination administration by closing the El Paso County Coliseum site and utilizing the convention center and other city-operated sites.
“This effort would potentially save the county millions of dollars by the city taking over their operation,” Acosta said.
She said the city also voluntarily allocated $2 million to UMC from CARES Act funding last year.
Cover photo: A University Medical Center nurse discusses the COVID-19 vaccine with a patient at the El Paso County Coliseum vaccination hub. (Photo courtesy of University Medical Center)