|
Budget Choices, Helping the Neediest, and Luxury Hotels
by Molly Henderson, County
Commissioner
As this year’s County budget
process shows, County government is, and will continue to
be, faced with difficult choices. Limited County resources
must go first to our citizens most in need of County help.
My decisions concerning Conestoga View and the
hotel/convention center project are driven by this principle
and supported by independent expert financial
reviews.
Continuing a million-dollar
yearly nursing home subsidy would have required the County
to further cut the budget for public safety, children in
need, adult rehabilitation, and other vital human services
provided by no other agency. This would have been the
wrong choice since after the sale CV is providing the same
level of nursing care to the needy, with quality of life
improvements. The sale decision, though painful, will
continue CV care for our elderly, without the nursing staff
cuts which would have been required if the County remained
the owner. It will also allow the County to minimize
reductions in human services to our neediest citizens in
this era of state and federal funding cuts to counties.
The convention center proposal
demands more tax subsidies than CV. Convention Center
supporters admit that the proposal requires a County hotel
tax subsidy of $3.2 million annually. The only proposal
feasibility study concluded that an additional $2.24 to
$4.81 million would be required annually to break even.
Former U.S. Representative Bob Walker says “It makes sense
to have a luxury hotel downtown” and admits, according to
the Sunday News, that “he also believes the economic studies
that have said the hotel cannot succeed to its highest level
without a convention center to provide meeting space.” In a
time of human service funding cuts and tax increases, it is
not right to spend $5.4 to $8 million annually in corporate
welfare to help support a privately owned luxury hotel.
Reinsel Kuntz Lesher, one of
this region’s most respected accounting and consulting
firms, was the independent expert that prepared the
Conestoga View Closeout Report. The report did not accept
the conclusions of either side, but independently found:
“...Facility Operating Losses
averaged either $875,000 or $1.3 million per year in each of
the last five years, depending on the methodology used to
measure the loss. . . . the County has subsidized the
Facility’s operating losses over the last five years and
would most likely have been required to continue subsidizing
the Facility in the future, had it not been sold.”
The Reinsel firm found that
the Lancaster County’s CV sale proceeds exceeded $12
million, even after payment of costs, trade debt, accrued
employee benefits, etc. In contrast, Dauphin County is
selling its nursing home for little more than half the $26
million spent in the last four years upgrading the facility.
As with CV, the County’s
hotel/convention center financial analysis is supported by
an independent expert report by PKF Consulting, one of the
world’s most respected hospitality consulting firms. The
PKF report was issued last May when Lancaster County
Convention Authority debt was estimated to be $42.7 million
and total hotel/convention center costs at $140 million.
Since the PKF Report,
over-budget construction bids have pushed the costs up by at
least $25 million to $165 million and counting. As a result
the LCCCA wants to borrow more money. In addition to the
$40 million in County guaranteed LCCCA bonds, the LCCCA now
hopes to borrow another $19 million. The payments on this
additional $19 million would also be made from the County
hotel tax – greatly increasing County guaranty risk and
magnifying the uncovered losses projected by PKF.
Reasonable people can and do
differ when very difficult choices must be made. My votes
and decisions about County finances are founded upon the
principle that the County must devote tax dollars where they
are most effective and most needed.
December 10, 2006
Paid for by Molly
Henderson for County Commissioner
|
