Denver voters will be asked in November to consider increasing the city’s sales tax to raise $70 million a year to help stabilize Denver Health, the region’s financially ailing safety-net hospital.
The Denver City Council voted 12-1 without discussion Monday to send the .34% sales-tax increase — which would add 34 cents to a $100 purchase — to the ballot.The city’s current sales tax is 8.81% and, if this measure is approved by voters, it will increase to 9.15%.
Councilman Kevin Flynn, who represents District 2, cast the only dissenting vote. He previously had expressed concern about “burdening Denver taxpayers” with tax increases.
Mayor Mike Johnston is considering asking the council to place a second sales-tax increase — one that would raise money for affordable housing — on the November ballot, administration officials told The Denver Post earlier this month.
If voters OK the Denver Health tax increase, the health system could only use the money to expand or maintain medical care in the following categories:
Emergency and trauma care
Primary care
Mental health care
Addiction treatment and recovery services
Pediatric care
There would be a cap on the administrative costs that could be drawn from the fund, as well.
Denver Health has struggled financially since 2021 as the cost of uncompensated care rose faster than revenues, with state officials warning earlier this year that, without changes to its business operations, the hospital was at risk of deteriorating into a “death spiral.”
The system lost about $35 million in 2022, CEO Donna Lynne told a council subcommittee at a meeting earlier this month. The hospital earned a $17 million profit in 2023, though that wasn’t enough to tackle the maintenance that it deferred in recent years, officials said.
Lynne also told council members that Denver Health could make it through the first quarter of 2025, but if it doesn’t receive additional revenue by then, it would have to make significant cuts. She didn’t specify what services those cuts might affect, but said the system has already instituted a hiring freeze, deferred maintenance, cut travel expenses and limited the circumstances where its insurance will cover anti-obesity drugs such as Wegovy.
Denver Health provided about $140 million in uncompensated care in 2023, and the hospital’s projections show it expects to spend $124 million on uncompensated care for Denver residents alone in 2025, according to the bill approved by the council. The system projects the total will exceed $140 million when including people from other counties.
The city contributed about $31 million toward offsetting those costs, and the state legislature voted to make one-time payments of $5 million to assist the system last year and again in the most recent session.
The ballot question would forbid the city from reducing its contribution in response to the sales tax.
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Originally Published: June 24, 2024 at 5:42 p.m.
