McCOOK, Nebraska -- A McCook, Nebraska, business owner and Red Willow County supporter who has invested a third of his life in service to the county asked county commissioners Monday morning "to put one house in order before building another."
Don Klein, owner of Klein's Motor Electric and a member of the county's fair board for 20-some years, told county commissioners Monday morning that he is "very, very concerned" about finances at the county-owned nursing home, and recommends that the county take care of Hillcrest Nursing Homes' critical cash flow situation -- precipitating the need for a $1 million loan -- before it builds a new law enforcement center and jail.
Another McCook resident, Gary Power, told commissioners during the public comments session at the commissioners' weekly meeting, that he is concerned that the county's tax levy will soon max out at the state-mandated 50-cent levy limit (per $100 of taxable valuation). Power said, "Looks like dire times to me," especially "if you're intent on building a jail. You're making a mistake."
Commission chairman Earl McNutt told Power, "I can't say what will happen." He added, however, that they'll know more within the next 30 days, as commissioners, county officials and the county's budget clerk get to work on the county's 2012-13 budget. "There may be a vacant lot here for a while," McNutt said, referring to the three lots north of courthouse on which the county will build its new 24-bed, $5.1 million jail and law enforcement center.
Nursing home officials have told commissioners that revenues generated by the facility will be sufficient to repay the $1 million five-year loan that the county authorized by commissioners at their weekly meeting July 9. Having the county repay the loan would mean the creation of a new (approximately) 3-cent (and not to exceed 7 cent) tax levy, which would be in addition to the 4 1/2-cent tax levy that will pay for the construction of the jail.
The county's current tax levy is 38 cents.
Don Klein said he wants to see Hillcrest run just as all other county offices are. He wants a tight budget, closely monitored, with income funneled into the county treasurer's office and claims then paid to Hillcrest. "This puts the responsibility on the commissioners' shoulders," Klein said. "This is the only way to fix things."
Because Hillcrest operations never required taxes before, its administrator and board of trustees have not been asked to answer to commissioners as county offices requiring taxes have been. From February 2012 -- when then-administrator Peggy Rogers fired a billing clerk -- through April, the nursing home fell behind in filing for Medicare and Medicaid reimbursement (together totaling about $225,000 per month) by three months, creating a cash flow problem until the bills could be caught up and reimbursements started trickling in. This problem was made more critical when the last two bond payments on a 20-year expansion/remodeling project, and an interest payment and construction payments on a new expansion project also came due.
Rogers quit on May 16. Since that time, Hillcrest trustees have discovered that no money was put aside to make the bond payments, and that paperwork to complete the sale of 20 bed licenses -- which would have generated $250,000 -- was not completed.
Klein questions whether the Hillcrest Nursing Home Foundation has the funds to help with the situation. "If the Foundation has the funds, can they be used to lighten the burden?" he asked. Money earning 1-2 percent interest "is not doing tax payers any good," he said.
Klein is upset that the capacity of Hillcrest has been decreased from 120 to 100 with the renovation of some double rooms to single, private rooms. He estimated that the revenue that those beds would have generated could amount to a quarter-of-a-million dollars over time. "That revenue is gone. Where is a quarter-of-a-million-dollars in revenue? The loss keeps growing," he said.
Klein is concerned that the tax bill of Red Willow County tax payers grows. In Red Willow County, there is a minimum of $50 million in bonded indebtedness, he said. "For every man, woman and child in the county, that's a tax obligation of $4,000 to $4,500 each," he said.
He is also worried that as the drought continues, 2013 will be declared a "water short year" by Republican River Compact standards, and irrigation wells and canals within two miles of the river can be shut off. "The crop loss will cost $20 million for 2013 alone," he said, and the loss of income from livestock will exceed $20 million.
Dealing with losses like that, Klein asked, "Are people going to be able to pay their taxes on time?" The ripple affect will touch every business -- directly or indirectly dependent on agriculture -- on main street, he said. He echoed an old cattle buyer who said he fears a drought "severe enough that the nation goes from a nation of abundance to a nation of famine."
Klein asked commissioners to "address one issue at a time ... get your ducks in a row," putting the jail "on the back burner" until Hillcrest finances are on solid ground and the area is out of the "extreme drought" situation declared by the U.S. Drought Monitor.
Klein stressed that he is not opposed to the new jail. "The jail is a need," he said. "We need it, but not if we can't pay for it."
He continued, "We can put the jail on hold until our biggest need is addressed."
He concluded, "Our responsibility is to the elderly of this county first."