A lot of noise has been heard of late about the socialization of medicine in the health care reform debate. Here in Hays County we are socializing not only a non-profit hospital, but a for-profit developer. They call it corporate welfare
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No doubt Seton is a welcome addition to Hays County with its new hospital and quality staff – actually, 'first rate' staff and medical care from what the RoundUp is hearing. We wish Seton success with its various medical and health care programs. Seton's arrival is another sign that Hays County is growing up. However, as Merle Moden points out in his well researched commentary, growing up does not necessarily require giving away millions in local tax subsidies to new development.
Subsidies are not abstract things, they add up to real money
We shudder to think about the total amount of subsidies granted by our local elected officials to business and land developers over the past 10-15 years. One hundred million dollars-plus probably would not be a wild guess. The troubling aspect to this practice of front loading with generous tax subsidies are all the costs we taxpayers get stuck with on the back end, like more traffic, more air & ground pollution, more road maintenance, more schools and school bonds, and higher taxes. If our elected officials can't produce proof that the tax subsidies are being paid back in full and improving our quality of life, then the taxpayers should insist that this practice be stopped. Smoke screen arguments about beneficial economic multiplier effects simply won't cut it any longer. A small circle of individuals usually make a lot of money on these deals. We want to see that the taxpayers are getting a good deal, too. Show us the money, honey. Some long overdue tax relief would be good, for starters. By Merle Moden
RoundUp Contributor
On December 27, 2007 Hays County signed an agreement with the Daughters of Charity Health Services of Austin doing business as Seton Family of Hospitals (Seton), a Texas non-profit corporation, and SCC Kyle Partners, Ltd. (SCC), a Texas for-profit limited partnership. These two entities agreed to construct a hospital, office buildings, and retail developments in the City of Kyle. In this agreement Hays County Commissioners agreed to subsidize these developments by rebating sales tax collections to the tune of an estimated $6 million over 15 years. Kyle committed to providing about $48.2 million in subsidies over 20 years with the Hays Independent School District providing a $400,000 subsidy.If these developments are economically viable, why would Seton and SCC ask for a government hand-out? And better yet, why would Kyle, the Hays school district, and Hays County cave in and provide subsidies? Are there undisclosed business relationships among the various politicians and the landowners, Seton, or SCC? These subsidies do not pass the smell test.
Hays County Commissioners initially refused tax subsidies for retail developments, but apparently caved-in to the subsidies when informed by Seton that failure to grant the subsidies would be a deal-breaker for the Kyle development. Ostensibly, Hays County Commissioners were desperate for a second hospital in Hays County. But, this explanation doesn’t hold much water, as Austin’s St. David’s Healthcare had land under contract in Hays County with the intention to build a hospital.
Public officials rationalize their decisions to grant subsidies by looking to the benefits of economic development. With few exceptions economic development that is not viable should not be made viable by government subsidies. I suspect that this project was economically viable from the start, but Seton and SCC simply sweetened the pot for themselves by manipulating the various spineless politicians into granting the subsidies.
A lot of noise has been heard of late about the socialization of medicine in the health care reform debate. Here in Hays County we are socializing not only a non-profit hospital, but a for-profit developer. They call it corporate welfare.
Merle L. Moden has resided in Wimberley since 1997. He is a retired economist with over two decades of experience in medical care rate-making. He served on the Austin Electric Utility Commission for several years, chaired a citizen’s committee on City of Austin Water and Wastewater cost of service, and served on the Travis Central Appraisal District Board of Review.
2 comments:
Mr. Moden,
What would be your definition of "a few exceptions"? ("With few exceptions economic development that is not viable should not be made viable by government subsidies.")
Would this include the federal bailout of GM? (In my opinion a direct payback to the unions, who ended up owning a portion of the company, talk about your failure to pass the "smell test". ("Are there undisclosed business relationships among the various politicians and the landowners, Seton, or SCC? These subsidies do not pass the smell test.") I would say with the feds, and in this context I mean Democrats, they are in bed with the unions as a payback for helping them get elected at a minimum, and who knows what else the unions hold over the heads of the federal government, ala, Democratic Party.)
I know, I know, before anyone says what's this got to do with local politics and business subsidy, let's examine the standard operating procedure - when it is the federal government doling out taxpayers' money it is generally accepted by local Dems that this is in the best interest of the nation economically. Yet with little to show in the way of job creation. Yet, when local government tries to stimulate job growth with "stimulus" money of its own locally to create business, this is suddenly evil as considered by the same parties that would typically be fine with big government largess. Double standard? Methinks so.
What impact will the new Seton hospital have on the local economy? Well, if it is like most hospitals, there tends to be multiple layers of auxiliary or ancillary businesses and services that crop up around it that won't get subsidies, but still create more economic activity from creating opportunities for small business owners in the area, to creating high paying good jobs for local people who may work in Austin now, but have the opportunity to work closer to home.
This is my take on it, Mr. Moden, though in general, I agree that tax subsidies ought to be avoided, or have triggers that demand repayment or cancellation of the agreement if benchmarks aren't met that justify the economic stimulus. (From my recollection, this was done by the County and Buda with the Cabela's. They were supposed to create "x" number of jobs, or else face repayment of some of the subsidies. As I remember hearing the story, they didn't meet their goal of jobs creation, and are supposed to pay back some of their subsidies. Have they? Don't know. Would be a good question to pose to the local politicians in both Buda and San Marcos - meaning the County.)
Anyway, just looking for your definition of the "few exceptions" and whether or not you see that as more of a local issue or does it apply across the board to local, state, federal levels? And does it matter whether or not it is "bailout money" to save a failing business, or "stimulus money" (ala, subsidies) to create jobs with a proven business capable of doing what they say they can do?
I appreciate your views and your "other side of the coin" coverage not seen anywhere else in Hays County. Everyone has bought in to business as usual. The effects are in plain view everywhere. We are becoming just a whole lot more of nothing special.
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