BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 72|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 72
Author: Bonta (D), et al.
Amended: 9/9/15 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SENATE GOVERNANCE & FIN. COMMITTEE: 4-3, 9/10/15 (pursuant to
Senate Rule 29.10)
AYES: Beall, Hernandez, Lara, Pavley
NOES: Hertzberg, Nguyen, Moorlach
SUBJECT: Eden Township Healthcare District: special taxes:
authorization
SOURCE: Author
DIGEST: This bill allows the Eden Township Healthcare District
(ETHD) to impose special taxes.
Senate Floor Amendments of 9/4/15 delete this bill's contents
and instead insert current language allowing the ETHD to impose
special taxes pursuant to specified provisions of state law.
ANALYSIS:
Existing law:
1)Defines a "special tax" as any tax imposed for specific
purposes, including a tax imposed for specific purposes, which
is placed into a general fund.
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Page 2
2)Prohibits a local government from imposing, extending, or
increasing any special tax unless and until that tax is
submitted to the electorate and approved by a two-thirds vote.
3)Allows a hospital district established pursuant to state law
whose hospitals are wholly owned and are operated by the
district to impose special taxes, pursuant to specified
provisions of state law.
4)Requires that a hospital district's board of directors must
determine the basis and nature of any special tax and its
manner of collection.
5)Requires that special taxes imposed by a hospital district
must apply uniformly to all taxpayers or all real property
within the hospital district.
This bill:
1)Allows the ETHD, until January 1, 2026, to impose special
taxes within the district pursuant to the procedures required
by state law.
2)Requires ETHD's board of directors to determine the basis and
nature of a special tax and its manner of collection.
3)Requires that special taxes imposed by the ETHD must apply
uniformly to all taxpayers or all real property within the
district.
4)Declares the Legislature's intent that funds from a tax
enacted pursuant to this section must be used to support the
purposes of the ETHD, including support of nonprofit and
public hospitals and other health care providers in the
communities served by the district.
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Page 3
5)Contains a finding and declaration explaining the need for
legislation that applies only to the ETHD.
Background
The ETHD formed in 1948 to serve the Alameda County communities
of Castro Valley, Hayward, San Leandro, and San Lorenzo. In
1954, ETHD opened Eden Medical Center (EMC) hospital. In 1997,
ETHD's voters approved a merger agreement between ETHD and
Sutter Health, which allowed the ETHD to sell EMC to Sutter
Health. In 2004, the ETHD purchased San Leandro Hospital and
leased it to EMC to operate. In 2008, ETHD entered into an
agreement with Sutter Health to replace EMC with a
newly-constructed hospital that would comply with the state's
seismic safety law. The 2008 agreement also gave Sutter the
option to purchase San Leandro Hospital. On December 21, 2011,
an appellate court ruled in favor of Sutter in litigation over
the terms of the 2008 agreement. On October 31, 2013, Sutter
transferred San Leandro Hospital to the Alameda Health System,
the public health authority that operates Alameda County's
health care system.
San Leandro Hospital is a 93-bed facility that provides a wide
range of medical services, including 24-hour emergency services,
critical care, a full complement of skilled surgeons,
rehabilitation services, and ancillary services to a population
of 265,000 people. St. Rose Hospital is a 150-bed independent
community hospital in Hayward, which provides a range of
services including cardiology, emergency, diagnostics, and
women's services to residents of Hayward and the surrounding
community. Both San Leandro Hospital and St. Rose Hospital are
located within ETHD's jurisdictional boundaries.
Some Alameda County officials are concerned that fiscal
challenges confronting San Leandro Hospital and St. Rose
Hospital threaten their ability to continue providing vital
health care services to their surrounding communities. As
officials struggle to find additional financial support for
those two hospitals, ETHD is considering seeking voter-approval
of a parcel tax to generate some of that additional funding.
However, state law allows a health care district to impose
special taxes, with two-thirds voter approval, only if the
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Page 4
district owns and operates its own hospitals (AB 3596, Hauser,
Chapter 1345, Statutes of 1988). Because ETHD no longer owns
and operates its former hospitals, it cannot impose special
taxes under current law. ETHD officials want the Legislature to
allow the district to impose special taxes regardless of whether
it owns or operates a hospital.
Comments
Purpose of this bill. The 1988 statute authorizing local health
care districts to impose parcel taxes within a district's
boundaries taxes limited the special tax power only to those
districts that own and operate a hospital. Despite having
recently owned San Leandro Hospital, ETHD is prohibited by state
law from imposing a parcel tax to support that hospital, which
provides vital medical services, including emergency room care,
to district residents. ETHD has provided financial support from
its existing revenues to St. Rose Hospital, but is prohibited
from imposing a parcel tax to help keep that hospital open.
This bill gives ETHD the same taxing authority that state law
already grants to many other local health care districts. This
bill does not require ETHD to seek approval for a parcel tax and
leaves the ultimate decision in the hand of district voters, who
must approve any proposed parcel tax by a two-thirds vote. This
bill simply provides ETHD officials with another tool to use to
support hospitals and health facilities that serve district
residents and are confronting severe fiscal challenges.
Revenues and responsibilities. Principles of efficient public
administration suggest that the power to raise revenues should
be exercised by the same governing body that has the
responsibility for deciding how those revenues are going to be
spent. This bill allows parcel taxes for the support of
community hospitals to be imposed by local governments that are
not directly responsible for those hospitals. If Alameda County
officials want to use parcel tax revenues to support San Leandro
Hospital, why not amend state law to allow Alameda County or
Alameda Health System to impose the parcel tax, rather than
having the revenues pass through ETHD? Or, alternatively, why
can't Alameda County impose parcel taxes within a county service
area established specifically to support San Leandro Hospital?
Precedent. ETHD is not the only health care district that
continues to exist without actually owning or operating a
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hospital. Enacting this bill may invite similar requests from
some of the dozens of other healthcare districts throughout
California that do not own or operate hospitals. The continued
operation of these healthcare districts without hospitals raises
broader policy questions about the need for such districts, and
whether they should be dissolved or merged into other local
governments. This bill appears to move in a different direction
by establishing a precedent that those districts should be
granted the power to collect new voter-approved taxes.
Good intentions. This bill declares the Legislature's intent to
limit the purposes for which ETHD can spend revenues from parcel
taxes imposed pursuant to this bill's provisions. However, this
statement of intent, which directs that the district must spend
parcel tax revenues "to support the purposes of the district,"
may be too broad to have any practical effect on the district's
use of revenues. ETHD faces its own fiscal challenges,
including more than $40 million in outstanding bank loans and
more than $17 million in obligations resulting from the legal
dispute with Sutter Health. Repaying existing indebtedness or
paying for ongoing district expenses appear to be allowable uses
for the parcel tax revenues under this bill's current language.
Legislators may wish to consider whether this bill should more
narrowly declare the legislature's intent that ETHD must use
parcel tax revenues only to support nonprofit and public
hospitals and other health care providers in the communities
served by the district.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified9/10/15)
Association of California Healthcare Districts
OPPOSITION: (Verified9/10/15)
Howard Jarvis Taxpayer's Association
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ARGUMENTS IN SUPPORT: Supporters argue that this bill allows
ETHD to provide vitally-needed financial support to hospitals
that serve district residents by seeking voter approval of a
parcel tax measure.
ARGUMENTS IN OPPOSITION: Opponents question whether a
hospital district that doesn't operate its own hospital should
have authority to impose special taxes and argue that ETHD may
use parcel tax revenues to pay its own substantial debts.
ASSEMBLY FLOOR: 78-0, 4/23/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,
Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,
Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,
Waldron, Weber, Wilk, Williams, Wood, Atkins
NO VOTE RECORDED: Campos, Salas
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
9/10/15 23:15:34
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