A joint budget subcommittee voted Monday to take an estimated $50 million in local money that pays hospitals for costs of treating indigent accident victims.
Taking the Indigent Accident Fund was proposed by Gov. Jim Gibbons to help balance the budget. His plan was to use it to leverage more Medicaid matching funds form the federal government.
Lawmakers, instead, voted to move the money straight to the General Fund, which doesn't leverage the added federal dollars but avoids potential problems with requirements for claiming Stimulus package funding.
The decision leaves counties exposed to potentially huge medical costs. There was testimony in February that a serious accident with multiple injuries could cost a hospital hundreds of thousands or even millions of dollars.
Those hospitals then bill the counties where the accident occurred for the medical costs.
Jeff Fontaine, head of the Nevada Association of Counties, told lawmakers taking the money opens those counties to potential disaster because one heavy medical bill might cost a small county like Nye or Esmeralda 25 percent of its annual budget without the fund being there to cover costs.
"We have now taken a successful public-private partnership that has operated for 25 years and created chaos," he told the joint subcommittee.
Fontaine said the association estimates the decision would have a $40 million direct cost to University Medical Center in Las Vegas and another $150 million to UMC and the other 16 counties over the biennium.
There has been some suggestion lawmakers could pass legislation relieving the counties of that legal burden, but that would just shift the cost to the hospitals which provide the medical care.
Former Nevada Association of Counties Director Bob Hadfield testified during the February hearing that the accident fund was created in the 1980s to stop legal battles between counties and the hospitals over the medical bills incurred by uninsured or under insured accident victims. The solution was to set aside 4 cents of the local property tax rate as a fund to cover those costs.
"If you wipe these funds out, you're going to create the biggest mess," he testified in February. "We're going to have litigation, going to have people hounded by bill collectors and you're going to bankrupt these little hospitals."
"If this is done, it's breaking a trust with the taxpayers," said Esmeralda Commission Chairman Nancy Boland at the hearing on the plan in February.
Reno Mayor Bob Cashell as well as others pointed out that, with the statutory property tax cap of $3.64 per $100 of assessed valuation, counties can't get back the 4 cents.
Only Sen. Bob Coffin, D-Las Vegas, voted against the decision to take the money, charging that the governor was just creating a hole in local government budgets.
Assemblyman Joe Hardy, R-Boulder City, agreed but like everyone else on the joint subcommittee, said he would support the move.
"I don't see any way out of this," said Sen. Bernice Mathews, D-Sparks.
Senate Minority Leader Bill Raggio, R-Reno, said he would support the plan on one condition.
"My support is based on doing something that alleviates the loss to local governments," he said.
The original plan counted on getting a total of $56 million out of the Indigent Accident Fund. But property tax revenue estimates have since been revised down to $48.8 million, leaving a $7 million hole in the budget even with the IAF money.
