An aerial photo taken in 2014 shows the current South Peninsula Hospital campus. (Homer News file photo)

An aerial photo taken in 2014 shows the current South Peninsula Hospital campus. (Homer News file photo)

Assembly approves hospital boundary ballot questions

Voters in both hospital service areas will weigh in on who should pay taxes to which hospital this fall.

Voters in both the peninsula’s hospital service areas will get to decide whether to expand their service areas’ boundaries this fall.

The Kenai Peninsula Borough Assembly unanimously approved a long-debated ordinance Tuesday that asks voters to move the boundary lines for the two hospital service areas. Voters in the Central Kenai Peninsula Hospital Service Area will vote on whether to move the current boundary line south about 15 miles to Barbara Drive in Ninilchik, while voters in the South Kenai Peninsula Hospital Service Area will vote whether to move their southern border south across Kachemak Bay.

Property owners within the boundaries of the service area pay taxes to support the hospital. Central Peninsula Hospital does not rely on its property tax revenue and taxpayers there pay a .01 mill rate, or about 1 cent for every $1,000 of property value. South Peninsula Hospital relies more on its mill rate, and property owners there pay 2.3 mills, or $2.30 on every $1,000 of property value.

The ordinance, proposed by assembly member Dale Bagley, is meant to address the issue of property owners just north of Ninilchik paying taxes to South Peninsula Hospital while saying they are closer to and prefer to use Central Peninsula Hospital.

Central Peninsula Hospital is the far larger of the two service areas by population — encompassing Kenai, Soldotna, Nikiski, Sterling, Kasilof and the other outlying areas, the population base is about 33,000 people. South Peninsula Hospital’s service area has a much smaller population — about 11,000.

With two ballot questions in the two separate areas, four outcomes are possible, each with a different revenue result. Both could pass which the borough’s Finance Department would be roughly revenue neutral for South Peninsula Hospital; Central Peninsula Hospital’s boundary could move south while South Peninsula Hospital’s does not, with the southern hospital losing about $500,000; South Peninsula Hospital’s line could move south and Central Peninsula Hospital’s could not, adding about $500,000 to South Peninsula Hospital’s revenue; or neither could pass, leaving the lines were they are.

The issue has been on and off the assembly’s agenda for several years. Most of the objection in the past has come from South Peninsula Hospital and Homer residents, who say that moving the line south would cost the hospital significantly in property tax revenue and would cause problems for the Ninilchik Community Clinic, which has a partnership with South Peninsula Hospital for physicians and medical services.

When Bagley originally proposed it, the common boundary was to be moved further south and the South Peninsula Hospital boundary move wasn’t included. Multiple public hearings and public meetings were filled with comments opposing the move, largely from Homer residents. Bagley and assembly members Kelly Cooper and Willy Dunne, who represent Homer and the surrounding areas, worked on the compromise to include the properties south of Kachemak Bay.

“When (South Peninsula Hospital’s service area) was formed a hospital was located in the City of Seldovia so the area south of Kachemak Bay was not included (in the service area),” Bagley’s memo to the assembly states. “Since then the hospital in Seldovia has closed and it is probably safe to say that most o the residents of that area use South Peninsula Hospital for hospital purposes. At a minimum they benefit from the availability of its services.”

After the substitute ordinance was presented, the opposition evaporated. At a public meeting Bagley, Cooper and Dunne coordinated in Homer, only two people testified, mostly with concerns about if Central Peninsula Hospital’s proposal passed and South Peninsula Hospital’s did not. The South Kenai Peninsula Hospital Service Area Board formally withdrew its opposition to the ordinance as well.

At the assembly’s meeting Tuesday, Clam Gulch resident Brent Johnson — who originally proposed the same idea when he served on the assembly — said he was glad to see the solution.

“Babara Drive is the halfway point between the two hospitals, and to me it seems very fair to make the line there,” he said. “I’m very happy Mr. Bagley was able to add the southern part of Kachemak Bay onto the ordinance because those folks use that hospital. It is their nearest hospital and so they should be in that service area.”

Dunne said he was happy to see the issue resolved and go to the ballot.

“That’s been many years in discussion and now it’s before the voters, so we’ll see how the votes handle that,” he said. “I really hope the voters are educated … and hopefully our South Peninsula Hospital will continue to thrive and not suffer any revenue declines.”

The questions will appear on voters’ ballots Oct. 2.

Reach Elizabeth Earl at eearl@peninsulaclarion.com.

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