Hospitals say first bond wasn’t enough

Childrens Hospital Los Angeles has an ambitious vision for its new building: ceilings decorated with happy images, playrooms on each floor, beds for parents to stay overnight in rooms with their ailing kids.

Some of that $548-million project is being funded through borrowing that California voters approved in 2004 to help expand and update the state’s 13 public and private children’s hospitals. But all the hospitals say they need more.

They are returning to the ballot Nov. 4 with Proposition 3, asking voters to borrow $980 million on top of the $750 million they OKd four years ago.

“We provide for the sickest, most seriously injured children in our community,” said Richard Cordova, president of Childrens Hospital, in Hollywood. “We know the economic conditions are challenging, but what higher priority is there than children?”

The first bond passed with 58% of the vote. The second go-round may be tougher, given the state’s fiscal problems and voter worries about the global economic meltdown. But the eight private hospitals made sure the campaign would be well funded, each donating around $850,000 -- making up nearly all of the $6.9 million raised to promote the measure.

“This is a special interest every bit as much as an oil company or anyone else,” said Lew Uhler, who runs the National Tax Limitation Committee, based in Roseville. “This is an abuse of the initiative process.”

A Field Poll published last month -- when the country’s financial crisis was not as severe as it is today -- found that voters supported Proposition 3 by 47% to 35%, with 18% undecided. Some of the state’s most prominent anti-tax advocates have signed the ballot argument against the measure , and California newspapers are divided.

Although the measure has no funded campaign against it, Proposition 3 faces some skepticism about whether the children’s hospitals are exploiting the electorate’s natural sympathy for their patients to leapfrog over other worthy construction projects. Normally, the Legislature decides which projects to fund.

Opponents of the proposition say California’s debt payments are already too high: The nonpartisan Legislative Analysts Office projects that the state’s existing debt payments at their peak in 2011 will eat up 6.1% of its revenue.

Uhler said that although the issue of ill children “tugs at people’s heart strings, it’s a time in our history where taxpayers need to say, ‘Hey, let’s go slowly. Let’s take care of the bonded indebtedness that we’ve already accumulated.’ ”

Together, the children’s hospitals have about 2,000 beds and treat about 1 million kids a year. Many are there for life-threatening illnesses that require heart surgery, cancer treatment or transplants.

Although the facilities’ financial strength varies -- some lose money while others have private endowments -- on average more than half of their revenue comes from the state’s Medi-Cal program for the poor, which has the lowest reimbursement rates in the nation.

But the rest of the hospital industry is in critical condition as well. Aging baby boomers could require as many as 7,000 more acute-care hospital beds by the year 2030, a 10% increase, according to a report last month from the California Health Care Foundation, an Oakland nonprofit.

The Rand Corp., a Santa Monica think tank, estimated in a report issued last year that it could cost the entire hospital industry as much as $110 billion to meet California’s seismic safety standards by a deadline of 2030.

“We have a serious question as to whether these [children’s] hospitals deserve to be first in line,” Beth Capell, a lobbyist for the Service Employees International Union, said at a Sacramento public hearing about the proposition last summer.

The union, which represents many hospital workers, did not take a position on Proposition 3, but Capell said, “We have many areas of California -- whether it is rural areas, South-Central Los Angeles or the Inland Empire -- where we have severe shortages of hospital capacity.”

Over the 30-year life of the bonds in Proposition 3, the borrowing would cost taxpayers $2 billion in principal and interest. The annual payments would be about $64 million on top of the state’s existing debt service, which last year amounted to $4.4 billion.

Out of the proceeds, the state’s five public children’s hospitals, including University Children’s Hospital at UC Irvine and Mattel Children’s Hospital UCLA, each would be eligible for up to $39 million. Up to $98 million in grants could go to each of the private nonprofit children’s hospitals, including Miller Children’s Hospital at Long Beach Memorial Medical Center, Childrens Hospital Los Angeles, Loma Linda University Children’s Hospital in Riverside County and Children’s Hospital of Orange County.

So far, $405 million of the 2004 bond money, or 54%, has been awarded, according to the state treasurer’s office. Diana Dooley, president of the California Children’s Hospital Assn., said that by the end of this year, 70% would be distributed. The 13 hospitals have plans to spend all the money before 2014, when other hospitals could apply for whatever remains.

The hospitals attribute the need for more money to the inflation in project costs caused by the increased cost of materials such as steel and concrete. Construction costs nearly doubled in the first half of this decade, the Rand report said.

--

jordan.rau@latimes.com

--

(BEGIN TEXT OF INFOBOX)

Proposition 3

A taxpayer-backed bond to expand and update California’s 13 children’s hospitals, which treat 1 million kids a year. Opponents say the state already has too much debt. Voters approved a similar bond for the same hospitals four years ago.

Key provisions

* Would borrow $980 million, which the state would pay off with $64 million annually over 30 years for a total cost of $2 billion.

* Proceeds would go to UC and private nonprofit hospitals treating the most serious childhood ailments.

* Money could be spent on new buildings, renovations and new equipment.

Supporters

* California Hospital Assn., California Nurses Assn., California Chamber of Commerce.

Opponents

* Howard Jarvis Taxpayers Assn., National Tax Limitation Committee, other anti-tax activists.

Campaign cash

* No funded opposition. Supporters have raised nearly $7 million, almost all from the nonprofit hospitals slated to receive the bond money.

Source: Times staff reports