Don’t force taxpayers to finance failing projects
By Jim Waters
Why should taxpayers be forced to fund or finance risky projects that the private sector doesn’t consider worth the risk?
A “For Sale” sign has hung around Louisville’s Jewish Hospital – a mega-money-losing operation – for years.
Private investors – even of the hedge-fund variety – refuse to accept the risk of taking on KentuckyOne Health’s various properties in Louisville, which lose more than $40 million annually, of which Jewish Hospital is responsible for $30 million.
Plus, the hospital needs upgrades that could cost as much as a half-billion dollars.
Enter the University of Louisville, which despite the fact it has its own struggling hospital, announced it’s buying these properties, is counting on a $50 million loan from taxpayers and is closing the deal by Nov. 1.
Ahem. How’s that going to happen since the Constitution reserves authority for expending taxpayer dollars to the legislature, which isn’t scheduled to meet again until January?
House Speaker David Osborne, R-Prospect, and Senate President Robert Stivers, R-Manchester – both longtime legislators – must understand that just because they and Gov. Matt Bevin want this project, there are 136 other duly elected lawmakers who must answer to their constituents.
No doubt some of those voters might want to know why taxpayers in Lee County, which Stivers represents, should be forced to not only bail out a failing hospital in Louisville but join a deal that, as Sen. Chris McDaniel, R-Taylor Mill, rightly analyzed in an interview with reporters, amounts to “a struggling hospital buying a failing hospital.”
“I think that this is a very bad idea,” McDaniel added.
It’s heartening, isn’t it, to see that there are still true conservatives in Frankfort who believe in limited government, even when possible political gain awaits those willing to dispense with such principles when they become inconvenient?
There’s a certain sweetness in UofL President Neeli Bendapudi’s understanding that all of this “is a big risk” for her university and that it’s “in the most difficult decision I have ever faced in my life.”
Bless her heart.
Doesn’t that just make it all so much more appetizing for taxpayers, who fear huge tax increases with severe cuts in services and agencies already occurring in the state’s budget in order to address one of the nation’s worst pension crises?
The acknowledgement by bureaucrats and politicians with access to the treasury always ends up being: “yeah, we know this is risky but we must forge ahead because, after all, places like Jewish Hospital are just too big to fail.”
Private investors who know much more about these projects than government ever will possess no such bailout option. They must sink or swim using their own ingenuity and capital.
Bevin couched the whole situation as “United we stand, divided we fall – that’s what this is about.”
Does this mean that legislators who want to limit the flow of funds out of the commonwealth’s treasury to previously agreed-upon public agencies, services and programs are somehow detrimental to Kentucky because they carry out their constitutional duties to protect taxpayers from wrong policies?
Actually, it would be most detrimental to issue checks for this incredibly messy project before a vigorous debate full of much skepticism and many hard questions occurs in the House and Senate.
Consistent belief and understanding in conservatism’s limited-government principles looks at this situation with faith in the marketplace to respond innovatively to meet the community’s health care and emergency needs were Jewish Hospital to close its doors.
It likely would be even be better since providers and their partners would find a way to supply the demand without the baggage this UofL-KentuckyOne Health deal offers taxpayers.
Bevin says he’s “a big believer in calculated risk.”
It’s what made him a successful businessman; he did it with his money, not ours.
Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. He can be reached at firstname.lastname@example.org and @bipps on Twitter.
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