NACO may demand refund of Indigent Accident money

The Nevada Association of Counties is looking into a possible legal challenge to demand repayment of money the state took from the Indigent Accident Fund.

If successful, that would cost the state some $44 million it has "swept" from that funding stream over the past three years.

NACO's board Friday directed its president, Doug Johnson of Douglas County, and executive director Jeff Fontaine to start looking into whether there are grounds to demand a refund.

The Indigent Accident Fund was created in 1985 by then-NACO Director Bob Hadfield and the board, dedicating a portion of local property tax revenues to a fund that would help cover extraordinary medical costs incurred by hospitals when indigents are involved in serious accidents. By all accounts, it has been a successful program, effectively ending the ongoing battle between hospitals, which were treating those indigents, and the counties, which were getting sued to cover those costs.

But the state has been "temporarily" taking that money -- more than $20 million a year -- for the past three years and continued the practice in the budget for this biennium.

Fontaine said that it isn't clear whether the counties have a legal case yet but that NACO should work with Nevada Hospital Association to decide whether they have a case or not. The argument, he said after the meeting, is that the IAF was dedicated "for a specific purpose," and the legislation for the past three years didn't release it for general use.

"It relates more to the authorization language to sweep the fund for the past three years," he said.

The legislation for this biennium, he said, seems to cover that by releasing the money for any use deemed appropriate.

Other board members agreed the issue should be investigated.

"The Indigent Accident Fund, in my opinion, was NACO's finest hour," said board member and Washoe Commissioner Dave Humke.

He said he believes that the counties have the right to get the money back but added, "I think you ask before you drop a lawsuit."

Humke said that in the wake of the Clean Water Coalition decision that forced the state to give up a number of its proposed local government sweeps, he thinks Gov. Brian Sandoval would at least seriously consider a letter seeking return of the money.

In the wake of that court decision, Clark County has already asked for the return of some of its property tax money.

Sandoval and lawmakers balanced their budget for this biennium by taking local revenues and shifting a number of programs -- or, at least, their costs -- down to counties. County officials have been looking for ways to challenge those different revenue hits.

But state officials have basically said that if the counties refuse to cough up the money, they'll just withhold it from their sales tax and other revenues collected by the state and disbursed to the counties.

NACO officials got some support on that issue from Controller Kim Wallin, who told them Friday that she doesn't support that.

"I'm not looking at withholding money unless I get a legal opinion," she said. "If it's not legal, I'm not going to do it. Unless there's legally a ruling that withholding has to be done, I'm not going to withhold."

In response to Humke's request, she said she would provide NACO with a letter saying just that.

"We're not solving any problem by taking the money from counties," she said after the meeting.