The Journal Star is reporting that some area non-profit businesses are concerned about the possibility of the City Council imposing a 5% utility tax on water:
With the City Council weighing a possible 5 percent utility tax on water, not-for-profit organizations such as hospitals, colleges and local governments like the Peoria Park District are examining how they can absorb a cost that could impact their operations….
Chief financial officers at the city’s cash-strapped hospitals — OSF Saint Francis Medical Care Center, Methodist Medical Center and Proctor Hospital — say the proposed increase could lead to operational changes within their organizations….
St. Francis spends about $600,000 each year on water. A 5 percent utility tax would increase the expense by $30,000, Harbaugh said.
At Methodist, the hospital’s water bill ran about $300,000 last year, and the proposed increase would mean an extra $15,000 to $20,000 a year in expenses, said Cal MacKay, the hospital’s senior vice president and CFO….
Peoria Park District Director Bonnie Noble said her district is estimating a 24 percent increase in water rates for next year, or an additional $60,000 tacked onto a typical annual water bill of $250,000. She said costs for park services could go up if the water utility costs spike.
“We’d have to spread the costs,” Noble said. “You just can’t keep absorbing these kind of things and run the same kind of operation you’ve run before.”
Three entities are looked at in detail here: OSF, Methodist, and the Park District. And we have an estimated annual increase in water bills for each entity: $30,000 for OSF, $15-20,000 for Methodist, and $12,500 for the Park District. Note on the Park District’s quote that the $60,000 figure listed in the article included Illinois American Water’s rate increase, which is outside the city’s control and was not figured into the OSF or Methodist figures. So, to compare apples with apples, I took the city’s proposed 5% fee times the Park District’s annual water bill of $250,000.
Now let’s take a look at some other recent news stories about these organizations (emphasis added):
The new OSF Center for Health at Glen Park will be open to the public Sunday. The 53,000-square-foot facility is set to open its doors after 19 months of construction on the $18 million project, which includes three buildings on the campus featuring 24 primary care physicians.
–June 12, 2009
On an average day, 200 tradesmen work on the hospital’s [OSF’s] $280 million Milestone Project, designed to modernize and expand the center and Children’s Hospital….
–January 17, 2009
What’s the monthly debt service on $298 million? I think it’s safe to say that one monthly payment alone dwarfs the $30,000 annual increase in costs that could result from the city’s imposition of a water utility fee. $30,000 is a rounding error for OSF.
Methodist Medical Center will delay the final two stages of its $400 million hospital renovation project until tight conditions in the credit market begin to loosen, CEO Michael Bryant said Thursday…. Methodist will continue with the first two phases of its massive renovation plan, which carry a combined price tag of nearly $30 million and include building a parking deck and constructing a new entrance to the hospital off Hamilton Boulevard.
–November 7, 2008
The same goes for Methodist. Even a more modest principal amount of $30 million will result in monthly debt service payments that go way beyond the predicted annual increase of $15,000 to $20,000. To put this increase in perspective, a single birth can cost a patient that much money.
But here’s my favorite:
In anticipation of shrinking revenues, the Peoria Park District will cut its budget for the rest of the year by $390,000, but the public will not be overly affected. “On a $40 million budget, this is less than 1 percent,” said Jan Budzynski, the park districts’s superintendent of finance and administrative services.
March 3, 2009
So, let me get this straight: Cutting $390,000 out of the park district budget is no big deal — it’s less than one percent of the budget and “the public will not be overly affected” — but an increase of $12,500 in water fees is going to be difficult to absorb — so much so that they’ll have to raise the cost of park services? [Insert “Dueling Banjos” music here.] It probably goes without saying, but the Park District can’t have it both ways.
It sounds to me like all these protests are pretty weak. If an attempt is being made to garner opposition to the water utility fee, this isn’t the way to do it. These large organizations with their conspicuous building projects aren’t going to get a lot of sympathy from the public. In fact, hearing how little this fee would impact them monetarily, it actually makes me more favorable toward it.
What about smaller organizations who have just had to lay off staff, cut programming and services to abused children and families? What about small churches? I am sure you can calculate the dollar amounts and say it isn’t that much, the same could be said for property taxes for your house. what’s another $50.00 a month to fund museums, parks, schools, councilperson lawsuits, and so on. When we are paying increases in everything else. Our household budget is tight, obviously there are things we have to pay, therefore other items are dropped. Same with some social service agencies. We have to pay the lights and the water out of the pie, that may mean on less staff member or fewer client needs met.
Additionally, (as much as it is difficult to swallow sometimes) the capital and the operating budgets are often separate. and swapping money from one to the other isn’t likely even possible. People will give dedicated funds to building things yet won’t to operating costs. Have never understood that, but it happens. There are entities that cost the city significant amounts of money in services, in fact either by a lasser faire approach or direct design and those are left untouched as it is not “politically” a good move.
I suspect ADM is the largest water user in the City of Peoria, last I knew they were not an American Water customer, they pump their own, maybe the non profits could try that.
This proposed tax is why voters turned down a city-owned water company. The city could jack up the rates with no oversight except voting council members out of office. But apparently they also can tax water use with no oversight from the Illinois Commerce Commission — a flaw in the law?
these “non-profits” are non-profit in name only. They can (and will) just raise their rates. Ordinary people who pay these taxes can’t just raise their incomes at will. It comes out of our hide – which means less money to spend around town and less sales for local businesses.
So…5% water fee? And everyone that uses IL-American water has to pay it. What happens to the Garbage Fee that is on the water bills now? Is it going away? We pay $88k a year to have IL-AM collect that, how much are they going to charge to collect that 5%? If not, then this is just a slap in the face to every citizen in Peoria (I feel nothing for multi-million dollar OSF). OSF uses police and fire services and they are indeed only non-profit in name only.
I hate fees. They are simply another tax. They can be raised at any time and they never ever go away. I’m still waiting for the HRA Tax to go away. Oops. It didn’t.
Why doesn’t the city council simply raise the property tax or increased the sales tax? It would be little and we would hardly miss it right? That was the Museum folks mantra.
Risng water costs are among the least of our worries. Read my blogs or count the costly tax-supported projects upcoming. Include the museum tax which goes into effect Jan. 1, musuem or not. Rememer, Peoria is to become a “world class city”. How do I know? Henry Hollings said so.
Yes, Virginia, there is a Santa. Lot’s of them, in fact. They come in the form of elected and appointed political spenders of OPM while they are safe with their guaranteed wages and benefits.The museum will be built with at least 50% taxpayer dollars. Keep watching.
Is it not possible the health community is over-building? Probably not because they have ways” to raise additional revenues.
Dave Leitch just dropped $300,000 on the county “to use as you see fit”. Stay tuned.
Merle: Hum — museum money?
Let me see here. The museum tax was actually a tax to be used for public facilities. We are the public and our bodies are our facilities. Do you suppose we could some how or another finagle a way to get that back to us? I mean we couldn’t possibly be doing any worse than our elected officials in trying to work this out, could we? Ho hum the older I get the sillier I get.
OSF is a business. It “may” try to justify its’ non-profit status by offering a small percentage of patients a discount or free services but the reality is that virtually no one can qualify.
you’re right mdd, and it’s high time its non-profit status be yanked.
mdd! I hate to burst your bubble but I qualified with OSF for several things. Grant you their charity is not big enough imho to qualify them for total non-profit status but it does work in some circumstances. Beggars can’t be choosers.
I’m back.
Merle is correct again, and I STILL can’t wait to hear the museum supporter’s take on this so-called ‘facilities tax.’
I will say this [again], at least OSF is expanding and employing people. That ridiculous museum will do what exactly….?
We bend over backwards far more for CAT and they have been doing what exactly?