UMC proposes next year’s budget with no tax increase

Could the El Paso Children’s Hospital bankruptcy actually hit you directly in the wallet?

ABC-7 broke the story Tuesday night, hours after a document was filed in bankruptcy court. It shows County leaders warn El Pasoans a tax hike “most probably will” happen because University Medical Center is keeping Children’s afloat.

The County explained UMC provides $33,000 worth of services to the Children’s Hospital every day and the monthly rent Children’s should pay UMC is about $10 million. Children’s went more than a year without making a payment to UMC and the County told the judge — they’re not anticipating Children’s will be making payments in the next fiscal year.

So the County is telling the bankruptcy court that El Paso taxpayers could be on the hook for Children’s Hopsital. But on Wednesday, when UMC presented it’s budget, ABC-7 saw that may not be the case.

Despite a proposed $33 million increase in its budget for next year and uncertainty about the Children’s Hospital, UMC officials said Wednesday they will not seek a significant tax increase.

UMC CEO Jim Valenti confirmed that the biggest uncertainty in the 2016 budget is the bankrupt Children’s Hospital, which he says owes his hospital more than $100 million for services and rent.

Valenti pointed to an important cash collateral hearing tomorrow in Austin. A judge will decide whether Children’s has to pay rent and how much. But he said at this point, UMC is simply recommending adopting a similar tax rate as last year and El Pasoans should not expect a big increase in property taxes next year.

That rate would be 22.1 cents per $100 of home valuation, up only a fraction of a cent from last year’s effective tax rate of 22.06 cents.

For the owner of a $100,000 home, County Auditor Wally Hargrove said that would represent less than a dollar increase in property taxes.

“We’ve got two important dates with the bankruptcy judge,” Valenti said. “(Thursday) and in two weeks on Aug. 11. So those things could have some bearing.”

“If the bankruptcy judge for example says (thursday), ‘Children’s zero lease payments and I’m going to reduce all these contractual payments to a negligible amount,’ that changes our world,” added County Judge Veronica Escobar.

Escobar went on to say, what happens (Thursday) in bankruptcy court, “absolutely could impact the budget” and the tax rate. She added that the County’s hope is the bankruptcy judge requires Children’s to make its lease payment.

Valenti told ABC-7 the budget only projects receiving about $5.5 million from Children’s. He says they’re prepared for anything.