At its Dec. 16 meeting, the Upper San Juan Health Service District Board of Directors, which oversees Pagosa Springs Medical Center (PSMC), heard a report about PSMC’s tax revenue and sustainability.
The presentation, which focused primarily on the Colorado Taxpayer’s Bill of Rights, or TABOR, was given by PSMC Chief Administrative Officer Ann Bruzzese.
TABOR limits the amount of revenue governments can retain and spend, with that amount based on the prior’s year revenue or limit, plus inflation and population growth. It also limits spending and borrowing.
Those limits can be amended if voters approve revenue changes, such as exempting a governmental entity from the limits — a process also commonly referred to as “de-Brucing,” named after Douglas Bruce, author of TABOR.
Bruzzese explained that the district’s strategic planning committee hopes that, by the summer of 2026, the board will decide answers to three questions:
• “Do we ask the voters for a continuation of our exemption from TABOR?”
• “Do we ask the voters for an exemption from the new 2024 Tax Limit law?”
• Do we ask the voters to help PSMC be sustainable through an increase to our mill levy or a sales tax?”
Bruzzese explained to the board she didn’t think the board would have enough information to make a decision that evening.
She then explained the board’s tax revenue history for context, including that the district receives revenue from a levy of 3.884 mills that was approved by voters in 2001.
The presentation notes PSMC has not asked for an increase since the mill levy was approved in 2001.
That mill levy is to provide emergency medical and hospital services, the presentation notes, with Bruzzese explaining PSMC has expanded its hospital and emergency medical services (EMS).
Bruzzese explained the second issue is the district’s de-Brucing.
The district, she noted, has received continuous voter approval to be exempt from TABOR, with the first exemption stretching from 2001 to 2006, the second from 2007 to 2016 and the third from 2017 through Dec. 31, 2026.
She then indicated the situation is further complicated by PSMC’s status as an enterprise.
“The Colorado Taxpayer Bill of Rights applies to Colorado governmental entities, excluding enterprises, and serves as a limit on revenue growth, spending growth and debt,” the presentation notes.
Bruzzese explained that enterprises can function outside of TABOR and explained the enterprise exception applies if three criteria are met:
• The enterprise is a government-owned business.
• The enterprise is authorized to issue revenue bonds.
• The enterprise received less than 10 percent of its annual revenue in grants, which she notes includes taxes, from all of Colorado state and local governments combined.
Bruzzese explained that, if this district weren’t approved to be exempt from TABOR, it would have to watch that 10 percent very closely.
She noted the district has borrowed a lot to expand the hospital, but that the district hasn’t had to panic about meeting the criteria since the district is exempt from TABOR.
“But, if you think about it ... if we don’t have the voter approval to be outside of TABOR, to be exempt from TABOR, then we really have to worry about that 10 percent,” she said. “We really have to worry if we’ve been offered an exceptional [Colorado Department of Local Affairs] grant whether or not we can actually take that grant money together with our tax money because if it exceeds the 10 percent and ... that’ll be a real problem for us because then we will be subject to TABOR.”
She then presented a problem for the board to “ponder.”
She suggested that if the board decides to take the TABOR issue back to the voters in 2026 and is not successful and the district is for some reason not exempt from TABOR, such as not meeting the 10 percent threshold, “our long-term sustainability then suddenly becomes at risk.”
TABOR’s restrictions, she noted, are intended for average governments and not the way hospitals must be managed to be sustainable.
Bruzzese noted that, with changes at the state and federal level, including that PSMC will have at least $1.4 million less coming in in 2026, the district needs strategic growth to be sustainable.
She further noted operational sustainability could be harmed if the district is subject to TABOR because medical staff labor costs and supplies often exceed inflation.
She also noted the financing restrictions under TABOR, suggesting the hospital and EMS are very capital-intensive and the district would have to repeatedly approach the voters to approve things like purchasing a new MRI machine or ambulance.
She noted it is the board’s call on how to move forward, but that it would present a strategically significant issue for the district.
Board member Wayne Hooper asked how close the votes have been for de-Brucing, with Bruzzese noting the last election was “very close.”
Hooper asked why it would be close, stating it seems like a “no-brainer.”
Bruzzese suggested that could be discussed as the district decides how to move forward, but that the statutory language process is “unfortunate,” explaining it’s a whole paragraph written as one sentence and not in simple language.
She noted that, from talking to people, if the ballot language makes them feel dumb, they get frustrated and may vote no.
In response to additional questions, Bruzzese clarified the district can provide information until it decides on a ballot question, at which point a political action committee would form and people could volunteer their time or donate.
Bruzzese then moved on to discuss the 2024 property tax limit law, which is effective Jan. 1, 2026.
That law, according to the presentation, “Limits tax revenue growth to 10.5% over a two-year period” and excludes some tax revenue growth, such as, for example, growth that is the result of new construction.
The presentation notes the law will apply to PSMC unless it seeks and is granted voter approval for an exemption.
Bruzzese then returned to the topic of sustainability, suggesting that decreasing state and federal support indicates there may be a need for more local support, such as in the form of a mill levy increase or sales tax.
She noted the district has grown its services “greatly” since 2008 and has never asked for an increase, with the presentation noting the mill levy was passed before the hospital was built.
Bruzzese noted that board members Kate Alfred and Mark Floyd, who sit on the strategic planning committee, asked for more data to see what increases would look like, and that data will be compiled over the next month or two.
She indicated she wants the board to feel like it has time to explore and ask questions.
Board member Eric Foss asked if there are any examples of hospitals that operate under TABOR, with Bruzzese explaining she’s not sure due to the enterprise exemption, which could mean some don’t accept grants.
She additionally later noted that many hospitals don’t have EMS, which operates at a significant loss.
Bruzzese later noted the board could choose to put any of the possibilities on the ballot or multiple, explaining the TABOR issue needs to be dealt with in 2026 and the 2024 law could impact PSMC in 2026.
randi@pagosasun.com
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