By Emily Cook, Liberty attorney
The Liberty County Hospital District #1 bond and tax rate propositions have proven to be the most political activity in south Liberty County since at least the 2016 or 2018 Republican primaries. The district’s election has seen an impassioned debate on the role of government, the deafness of taxing entities to just continue “counting rooftops” to fund government, the vision of the older generation in town and the hesitation of the younger.
But there is vision, opinions and anger, and then there are facts.
First, the propositions authorize two taxes. The hospital is currently funded by what is called Maintenance and Operations (M&O) tax. Proposition B authorizes a bond, which has to be repaid through what is called an Interest and Sinking (I&S) fund. Section 26.012(16) of the Texas Tax Code does not allow funds from M&O property taxes to pay for service on bond debt. The district has to levy an additional tax to fund the I&S.
Now, Section 286.142 of the Texas Health and Safety Code requires that taken together, all of the taxes imposed by the hospital district cannot exceed the limit approved by the voters at the election authorizing the levy of taxes for the bond. In other words, the two taxes taken together cannot exceed the 18 cents per $100 of valuation contained in Proposition A.
Whether future board members can increase the 18 cent tax rate via another election should the bonds prove to be too expensive is an unclear question that has not been dealt with in state law. It is also important to note that Proposition A’s double increase is not required to go toward bonds for a new physical hospital building. If voters approve both propositions, and the board subsequently decides against issuing bonds for a new hospital, voters have already authorized a doubling of the district’s tax rate to pay for whatever the hospital board deems appropriate.
Additionally, nothing prevents a future board from coming back to the voters, asking for more bonds and more tax hikes. By then, the mantra will be well-known refrains of, “But it’s too big to fail,” “Do you hate sick people?!” or, “We’ll just have another vacant building in town!” Other rural communities embarked down this path decades ago and failed miserably. Does Liberty have some secret sauce that Huntsville, La Grange and a host of other communities did not?
It is extremely important that voters take personalities out of the analysis and focus on what they are being asked to legally authorize. The current board members may have good intentions, but they will not be the board for the next 50 years. Voters are asked to be financially responsible for a project akin to supporting infrastructure and operations for another school district. Is your family ready for such a responsibility?
Emily Cook is an attorney in Liberty focusing on constitutional law, campaign finance, and nonprofit governance. In addition, her general practice includes guardianship, estate planning and employment law.