VHCD sets 2023 budget, as talks continue with Sea Mar

Commissioners have expressed a conservative approach to 2023 budgeting that would preserve the district’s current revenue in order to allow the district to pivot as needed to meet the community’s needs.

In the midst of continuing uncertainties regarding Sea Mar Community Health Center’s plans to operate a clinic on Vashon independently of Vashon Health Care District (VHCD), the taxing district’s commissioners passed a $1.95 million levy and budget for 2023 at their Nov. 18 meeting.

The new budget anticipates $2 million in revenues, but only about $473,000 in known expenses at this time, due to the fact that VHCD will not pay a subsidy to Sea Mar in 2023 — an annual expense slotted at $1.5 million in both 2021 and 2022.

However, the budget also includes numerous contingencies for possible additional expenses that could occur in 2023, including the need to pay a new healthcare provider a subsidy of $100,000 per month, beginning on July 1.

Another contingency expenditure would go to pay off a line of credit to King Counting, amounting to $595,000 — funds used in part by VHCD in 2022 to purchase land on which to build its own healthcare clinic. VHCD established the line of credit in early 2020, to pay its bills until it could start to collect property taxes in the spring of 2021.

The district anticipates $323,000 in administrative expenses, which include the salaries and benefits of its paid superintendent and administrative assistant, payments to Sunrise Ridge for rent and utilities at the Sunrise Ridge clinic, and a proposed lease of a new office/meeting space for the district, among other expenses.

An expense of $150,000 to support new VHCD programs, which are yet to be determined, is also included in the budget.

Other than tax revenues, the only significant source of income noted in the new budget is approximately $46,000 that VHCD expects to receive from Sea Mar through June 2023, as a sub-lessor of the Sunrise Ridge Clinic.

VHCD’s 2023 budget is posted on the district’s website, at vashonhealth care.org.

Commissioners take a conservative approach

At recent meetings, commissioners have expressed a conservative approach to 2023 budgeting that would preserve the district’s current revenue in order to allow the district to pivot as needed to meet the community’s needs.

“There are a lot of contingencies and maybes in this budget,” said commissioner Eric Pryne. “The timing was not ideal and I think the board’s feeling was that, with so much unknown, we needed to have a significant amount of money available for those unknowns.”

However, at the Nov. 18 meeting, Pryne asked commissioners to consider a gesture to taxpayers: he made a motion to reduce VHCD’s 2023 levy amount from $1.95 million to $1.85 million and amend the budget accordingly to reflect the 5% drop in income from the levy.

“I recognize that we face many uncertainties, and need to budget not knowing what our actual expenditures are going to be,” Pryne said. “…I just think we don’t need quite as big a cushion for those uncertainties as the proposed budget provides.”

Pryne pointed out that although VHCD’s 2023 levy is the same as 2022, assessed values of some properties have increased more than others, which means that some taxpayers will pay VHCD the same or less in 2023, and others will pay more.

His proposal to reduce the levy, he said, would result in no tax increase for any taxpayers.

In a discussion following the motion, all four other commissioners said that they would not support Pryne’s motion, due to the unknown costs that the district could face in 2024, as well as the minimal relief that the proposal would provide to taxpayers.

“The most important thing we can do for taxpayers is to make sure that services can be provided,” said commissioner Wendy Noble. “That’s where the rubber meets the road.”

Pryne’s motion did not receive a second, and Pryne voted with the rest of the commissioners to unanimously approve the passage of the budget and levy.

Negotiations with Sea Mar

At the Nov. 18 meeting, commissioners also discussed Sea Mar’s Nov. 11 written response to its “Proposed Acceptance Criteria” — a document VHCD sent to Sea Mar in mid-October.

In the document, VHCD has asked Sea Mar to commit to fully funding operations of a comprehensive Vashon primary care clinic for 10 years, among other requests for transparency.

In response, Sea Mar executives declined to make that 10-year commitment, stating instead that they considered their commitment to Vashon to be “permanent.”

Sea Mar also declined to provide a 10-year proforma budget showing how the organization intended to fund net clinic operating costs, or replace the revenue that was provided by VHCD’s subsidy.

“Sea Mar believes the need to subsidize any operating losses will be short-term, and that Sea Mar should be able to achieve financial viability in the near future,” their response said, in part.

The executives also stated that Sea Mar will finance the construction of its new clinic on Vashon — to be located on the site of Vashon’s Spinnaker building — with the nonprofit’s own equity as well as with $3 million in state funding.

That appropriation of funds was originally awarded to Neighborcare Health, in 2018, to build a new clinic on Vashon, but was transferred to Sea Mar when it took over the operation of the Sunrise Ridge clinic in 2020.

Prior to Sea Mar’s August announcement that it intended to sever its relationship with VHCD, commissioners said they, too, hoped to tap the $3 million in order to build a new clinic, which would be operated by Sea Mar.

In discussing Sea Mar’s responses to these and other questions addressed in the Criteria document, as well as complaints that islanders have brought to VHCD about the level of care they have received at Sea Mar, the commissioners said they would continue to press Sea Mar for more answers as to how they intended to operate on Vashon.

“It’s unfortunate that we’re going to be cut out of a role of providing advocacy on the island,” said Wendy Noble. “We are getting emails all the time about gaps in care and near misses – who is going to be providing that oversight now? “

Commissioner Alan Aman said it was the commissioners’ duty to press Sea Mar to provide the best care possible for islanders.

“I personally wouldn’t concede a thing until we’ve turned over every rock,” he said.

Since Nov. 18, negotiations with Sea Mar have continued, said Tim Johnson, superintendent of the district.

“District representatives, including myself, met with Sea Mar [on Nov. 27], and had what I would characterize as productive discussions regarding future commitment levels, lease arrangements, capital projects, and the nature of our relationship going forward,” Johnson said, on Sunday. “We are currently awaiting some information regarding the matters discussed, and are hopeful we will have a more detailed announcement soon.”

Johnson added that while sublease arrangements are not officially in place past the end of this year, he did not anticipate any immediate interruption or reduction of Sea Mar’s service after that time.

In an email to The Beachcomber on Nov. 18, Sea Mar executive vice president Mary Bartolo said that Sea Mar and VHCD had reached an understanding that Sea Mar’s sublease at Sunrise Ridge would continue until at least June 30, and that Sea Mar had also agreed on a retroactive reduction to its 2022 subsidy payment from VHCD.

Bartolo, who also characterized talks with VHCD as being “positive,” also included design drawings for Sea Mar’s clinic on the Spinnaker Building site. She said that Sea Mar’s architect had submitted a permit application for remodeling the existing Spinnaker Building, and has been preparing permit drawings to construct a new clinic building.

“If we can work out an extension of the current lease with VHCD, then the remodel of the building will not be necessary,” she added.