Almost 30 years ago, Idaho’s largest public hospital built a new building, paying for it by issuing $30 million in revenue bonds.
Construction began on Kootenai Medical Center’s main building in 1984 and the hospital paid off that debt in 1995, said Joe Morris, CEO of Kootenai Health, which includes the hospital.
Issuing revenue bonds to build a new public hospital wouldn’t be possible today, however, because of a 2006 Idaho Supreme Court decision that prevents government entities from taking on multiyear debt for projects without voter approval. An exception is made for debt related to emergencies or for court orders that can’t be delayed until after an election.
In November, Idaho voters will consider three amendments to the Idaho Constitution that would give public hospitals, airports and city-owned electric systems greater ability to take on long-term debt without asking voters for permission. The 2010 state Legislature approved the amendments to be placed on the ballot.
All three amendments emphasize that no tax dollars could be used to repay the debt. Instead, revenues from improvements at the airports, hospitals and municipal electric systems would be used for repayment.
“It provides a level playing field for public hospitals compared to private and nonprofit, who have a lot more tools and flexibility,” Morris said of the amendment that would affect public hospitals. “It gives the ability to small rural hospitals to provide needed care close to home.”
However, David Frazier, of Boise, who brought the lawsuit resulting in the 2006 decision, said the amendments amount to nothing more than an effort to deny citizens the right to vote on public financing.
“They all seek to disenfranchise the Idaho voters,” Frazier said. “Everything they seek to do, they can currently do with two-thirds assent of the voters. That’s the key thing. That’s what the Constitution calls for.”
Frazier said elected officials don’t trust the judgment of voters to make the right decisions. Frazier’s suit, Frazier v. City of Boise, challenged the city’s plan to build a $19 million police station and a $27 million parking garage. The parking garage issue made it to the Supreme Court.
The three proposed amendments would permit public airports, hospitals and municipal electric companies to issue revenue bonds to acquire or construct facilities or equipment to provide services.
Morris said that since the 2006 decision, public hospitals have struggled to find ways to keep up with medical advancements. Equipment has aged at the hospitals that used to buy things like MRI machines on lease-to-own arrangements, which are also prohibited by the Frazier decision, said Morris, who is chairman of a statewide committee attempting to pass the public hospital amendment.
“That’s been the No. 1 way smaller hospitals have acquired that equipment,” Morris said.
From 1975 to 2006, Morris said, Idaho’s public hospitals issued $418 million worth of revenue bonds, all of which were paid back on time with no defaults and no reliance on property taxes. “We think we have a great track record of being a very responsible borrower of money. All the public hospitals, no matter what the size, have always paid their funds back in a timely manner.”
A website supporting the airport amendment points to an Idaho Transportation Department study that identifies about $740 million in needed infrastructure improvements at the state’s airports over the next 20 years.
“We lost a tool we had used historically,” said Greg Delavan, director of Coeur d’Alene Airport/Pappy Boyington Field. In the past, he said, the Coeur d’Alene airport also has used leases to put in sewer or water lines for hangar subdivisions, paying them back with revenue from the developments.
“It allows us to act more like a business and invest in capital improvements,” Delavan said. “I understand about government agencies run amok, but from my perspective, I’ve never seen it abused.”
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