When posed the question, "What will the impact to services be [of a $3.8M B&O tax increase on non-profit healthcare providers]?" the City Council answered, "Absolutely nothing."
The City is asking these five organizations to pay an additional $3.8M in taxes without cutting services. This disconnect between the reality of running an organization with thousands of employees, and taking additional taxes to balance the City's own books was never more apparent than in the the above quotes from Tuesday night's City Council meeting. (Yes, the Council actually said this. Video of the meeting is here.) (We also previewed the meeting here.)
As the Chamber highlighted in its testimony on Tuesday, the non-profit healthcare organizations are required to reinvest any surplus revenues back into the community in the form of clinics, community events, and development. While Tacoma's hospitals may not be moving anytime soon, they have plenty of choices on where to locate their non-provider services.
In fact, time and again, Multicare and Franciscan have chosen to locate those facilities in Tacoma while others were leaving. As a July, 2011 article in The News Tribune noted, when a call center on State Street was abandoned by another business laying off 200 people, Franciscan stepped in and opened up a training center with 220 employees. When Expedia moved out of its location at 21st and Pacific, Multicare stepped in and leased the space. When another company vacated its corporate headquarters at 13th and Market, Franciscan moved 315 employees in. What was once the USWest building at the corner of 13th and Commerce is now Franciscan's administrative offices.
There are numerous other spaces throughout the City that these organizations lease, partner, or own - all of which provide direct and spillover jobs, revenue, and taxes to Tacoma. In fact, the same News Tribune article noted that these community organziations occupy 3.27 million square feet in Tacoma - the equivalent of nearly 15 Russell Buildings. Yet rather than discussing the potential benefits growth in the healthcare industry can bring to Tacoma, the Council is focused on things like executive pay.
On Tuesday, February 21st, the Council will have a final reading on the ordinance to increase the taxes on Multicare, Franciscan, Community Health Care, SeaMar, and any other non-profit providers thinking about Tacoma. When the issue first came up last November, the City proposed a $600,000 tax. A couple of weeks ago Council increased that to $940,000. Now an amendment to the ordinance is proposed for Tuesday to increase the tax to $3.8M. In contrast the communities surrounding Tacoma have no B&O taxes on healthcare. How much is enough for Tacoma's Council?
If you are concerned about the escalating business taxation and the impact this may have on the growth of the healthcare industry in Tacoma, including the spillover effects in restaurants, housing prices, and the like, you're encouraged to contact your City Council.
UPDATE (2/21/12): Chamber President & CEO Tom Pierson's letter to the City Council can be viewed here.