Can taxpayers ever get a break?

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As the public pension crisis unfolded, the entity that sets accounting standards for governments decided that more disclosure of unfunded pension liabilities was needed. These are huge numbers (almost $6 billion in in Iowa), and, for the most part, have been flying under the radar in government financial reports.

Now, every government that is a member of a state retirement system (including state government and almost all local governments) must reflect its share of the state’s total unfunded pension liability on the face of its financial statements, rather than as a footnote as was past practice. There is no change in the actual liability, nor any change in the way it is being paid off, but the disclosure is different.

For taxpayers, this should be a good thing, right? It should help the public better see the true cost of these plans, which guarantee benefits to retirees at the expense of taxpayers when the stock market tanks. Right now (and for the next 20 to 30 years) taxpayers are making payments of $400 million per year to retire the shortfall arising from the last collapse. The new reporting doesn’t change that; it just makes it more transparent.

Alas, even the best-intentioned measures can be twisted into an argument to compound the taxpayer burden.

The Taxpayers Association of Central Iowa has been working with Broadlawns Medical Center to reduce its property tax asking in view of the impact of the Affordable Care Act in reducing its charity care burden.

Broadlawns, to its great credit, is reducing its rate; but we had urged more. Here’s the great irony. In defending the need to hang on to so much property tax revenue when it appears to no longer be needed, the board chair cited Broadlawns’ new pension reporting requirements

So think about it. Taxpayers are already making the necessary $400 million annual payments to erase the shortfall in pension funding, but now are being asked to pay again because of a change in how it’s reported. Somehow I don’t think this is what the Government Accounting Standards Board had in mind. In fact it’s almost scary to think what would happen if every public entity were to demonstrate similar confusion.

It’s especially ironic for Polk County taxpayers who, in this instance, are being quadruple-charged:

  • Once to pay for the actual pension shortfall;
  • Again because of new reporting of the pension shortfall;
  • Once via property tax to cover the cost of care for patients at Broadlawns who were formerly “charity care” (non-paying) patients; and
  • Again via state and federal taxes for the same patients who are now covered through expansions of the (taxpayer-funded) Medicaid safety net program.

Can taxpayers ever get a break? This is the kind of thing that can cause voters to become desperate.

One Response to Can taxpayers ever get a break?

  1. Vance says:

    Here in Lake County, FL, we also have a hospital tax district that collects 1 mill property taxes to split between two local hospitals and about five clinics. The intent is to subsidize charity or indigent care. We are the ONLY county to have this type of tax that collects about $8-9-million. For forty years, half the tax base never even got to vote on the tax because of the slippery way it was implemented. Fortunately, grass roots tea party members rose up and pushed through a local law that forced a referendum every 10 years for voters to approve or not approve the tax. That vote is this year, so we will see – the hospitals will wage a massive “education” campaign to get the free money, while I have not seen any accounting for reduction in indigent care costs due to medicaid expansion. (Florida actually did not expand Medicare, but pays another way for indigent care). You have to watch these guys – it is like the whamo kids game – if you reduce revenues one way, another way pops up.

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