REGIONAL – The Cook-Orr Healthcare District has approved a preliminary levy increase, increasing the annual property tax by $200,000. With the increase, the levy will rise by 18 percent from $1.09 million to a record $1.29 million.

Cook Hospital Administrator Al Vogt said the increase was triggered by a number of factors and won’t cover the full brunt of the impacts to the hospital and nursing home.

“We were mindful that folks are already seeing tax increases from other entities and tried to keep our levy increase as modest as possible,” he explained.

The federal two-percent sequestration of the hospital’s Medicare reimbursements, which started in April 2013 and will continue into 2014, will result in an annual loss of $200,000 in revenue for the facility, Vogt noted.

Other added costs include a rise in health insurance premiums for the hospital and nursing home employees, which is expected to have an annual impact of $50,000 in increased expenses, and salary increases that have been negotiated into contracts that will increase costs by $140,000.

In addition, the facility will have the cost of a nursing home feasibility analysis, being conducted by DSGW. The full cost of that study is unknown. Joining the Regional Accountable Care Organization Collaboration with other area independent hospitals would add another $25,000 to the tab.

The increase in expenses would be offset in part by increased revenue from the state for the nursing home. Assuming the nursing home is at 90-percent occupancy, that rate increase would generate an additional $35,000 for the facility.

The Cook Hospital and Nursing Home also benefitted from a reduced propane bid this year. The lower bid could result in a savings of about $40,000.

Levy’s impact

The levy’s impact on taxpayers will vary depending on the market value of their property.

A homesteaded residence with a market value of $100,000 would see its taxes rise from $111.06 to $132.28 — a difference of $21.22. A homesteaded residence with a market value of $500,000 would see taxes jump from $555.28 to $661.38 — a difference of $106.10.

The way the levy is being apportioned will also be adjusted. The nursing home’s share will remain at $300,000 but the hospital’s share will be increased from $206,000 in 2013 to $445,000, an increase of $239,000.

To allow for that increase for the hospital costs, the capital levy request will be reduced by $9,000 from $409,000 in 2013 to $400,000 in 2014. Ambulance services in Cook and Orr will take a bigger hit, seeing their portion shrink by $30,000 from $175,000 in 2013 to $145,000 in 2014.

The Cook-Orr Healthcare District did not raise its levy for 2013 but narrowly approved a 22-percent hike in 2011 for the levy collected in 2012. Under that increase, the levy rose by $194,000 from $895,926 to $1.09 million.

Board President Judy Pearson said the levy increase was necessary at that time to keep pace with rising expenses.

The HealthCare District’s ability to levy was granted by special legislation approved in 1988. But the district was restricted to a two-mil limit on the levy and could only spend the proceeds on capital improvements.

That changed in 2008 as a result of legislation championed by Sen. Tom Bakk and Rep. David Dill and included in the tax bill signed by Gov. Tim Pawlenty. The legislation eliminated the restriction on how much the district could tax and also allowed the district greater discretion on how to spend the levy.

The levy jumped 55 percent in 2009, rising from $576,196 to $895,926 and remained at the same amount in 2010. The levy fell to $875,290 in 2011. Vogt said the reduction was meant to give taxpayers some modest relief and was made possible in part by a $125,000 grant that the hospital received from the Office of Rural Health and Minnesota Department of Health. The 2013 levy of $1.29 million will be the largest collected by the district.