When the East Texas Medical Center Regional Healthcare System’s acquisition by Ardent Health Services is finalized, all of ETMC’s properties will go back on the tax rolls. That could mean a substantial budgetary boost for local taxing entities.
Ardent is a for-profit company, while ETMC has been a nonprofit. Nonprofits don’t pay property taxes. For-profit firms do.
Smith County Chief Appraiser Michael Barnett said the appraisal district has only a vague idea of what ETMC’s properties are worth, but puts it at about $195 million.
“We don’t put a lot of time and effort into appraising nonprofits, and some of the numbers we have now are out of date,” he said. “But we’ll start the process of assessing a value and taking a look at all of the properties.”
That will include equipment, fixtures and even the hospital system’s three helicopters, Barnett said.
“So that number could go substantially higher,” he said.
But even just based on that number, ETMC’s becoming taxable will mean a significant bump in revenue for taxing entities, including Smith County, the city of Tyler and the Tyler Independent School District.
Tosha Bjork, Tyler ISD’s assistant superintendent of finance & operations, said taxes from the hospital will be a big boost, but that it will come with some caveats.
“It would mean about $2.7 to $3 million, but our state revenue would go down,” she said. “When we receive an increase in local taxes, the state reduces what it sends us. The first year we would get the full benefit. But the next year, the state will decrease what it sends us. We never get it dollar-for-dollar.”
And there could be other factors that mitigate the benefit to the district, she said.
“It’s a lot of money, but we might also have to pay more in health care,” she said. “They’re our provider, so they may pass along some of the taxes to us. We’ll just have to wait and see.”
The Tyler ISD budget for the current fiscal year is $31.7 million for debt service, and $148 million for general operations.
Smith County’s increase in revenues - again, based on Barnett’s low estimate of $195 million in valuation - would be about $643,500. The county’s tax rate is 33 cents per $100 in property valuation.
County Judge Nathaniel Moran said the windfall could prove to be a unique opportunity for the county.
“I think it’s an opportunity to look at what we’re doing, and seeing if there’s something we’ve historically neglected that we could now address,” he said.
Moran cited three areas where it might make sense for the county to spend more: mental health issues - including the county’s mental health court, but not limited to that; fleet management for the county’s non-law enforcement vehicles; and roads.
Spending more now in those areas could mean savings in the long run, he said.
“Clearly, these are things the Commissioners Court will have to talk about, and they’re things we should be evaluating anyway,” he said.
But Moran added that he doesn’t expect to grant ETMC and Ardent any kind of tax abatement. ETMC isn’t a new business relocating to the area, or expanding significantly – and those, traditionally, have been the focus of tax abatement agreements.
“I just don’t see how this fits the tax abatement laws,” Moran said.
The city of Tyler also could see a big bump in revenues. Based on the city’s tax rate of 24 cents per $100 in property valuation, Tyler could see a revenue increase of $468,000.
City of Tyler officials declined to comment for this report, because too many details have yet to be ironed out.
“I’m just proud we’re attracting great medical partners for this community,” Mayor Martin Heines said. “But I really can’t comment until we know more about the structure of this transaction, and how it will affect us.”