Published: June 10, 2008 10:45 am         

One cent to fund hospital is still good deal

Last week Valley View Regional Hospital officials reported a one cent sales tax collected on retail sales in Ada to fund the hospital may end sooner than expected. It is slated to end in 2014, but according to Rory Ward, VVRH chief financial officer, the tax could end as soon as 2012.

For some Ada residents the one cent sales tax increase to fund construction of the hospital has been a bone of contention since it was first approved by voters in 1983. This is because original estimates predicted the bond to finance the project would be paid off in 15 to 20 years.

What no one could foresee is that, due to the oil bust, 1983 was about the worst year imaginable to get the project going, at least in financial terms. Formerly robust sales tax collections plummeted along the same trajectory as the per barrel price of oil. In a way, that left Valley View holding the bag because some payments had to be subsidized out of hospital operations when sales tax collections fell short.

In 1996 the hospital board wisely took the opportunity to refinance at a lower rate. Because of this and the fact Ada’s economy has picked up steam (resulting in increases in monthly sales tax collections), the debt is being paid off sooner rather than later.

Despite the occasional negative comment one may still hear today about the one cent sales tax to fund the hospital, kudos are due those in 1983 who had the vision to see a community can exist without many things, but will never be vibrant and viable without a hospital. It is a good thing the bond is finally being paid off, but in the end a penny tax to help finance a hospital is a small price to pay.

     

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