So, the mayor is ready to shut the whole expansion project down, at South Peninsula Hospital. This from the man who made a compelling case why it had to go forward to save the taxpayers extra costs from any further delay? It seems that he has also made a compelling case for why service area taxpayers would want to continue local input in managing the hospital to balance against Soldotna bureaucrats acting for political purpose and expediency, which is what seems to motivate the mayor in this instance.
It surprising that someone who has been involved in local government for so long is apparently ignorant of the purpose and value of recognizing depreciation expense as a way of conservatively managing an asset such as the hospital. It's equivalent to having one's employer make deductions from your pay then set it aside for you in savings before your check is cut. It is still there and available if needed, you just pretend that it isn't for bookkeeping purposes and temptation suppression.
Similarly, a portion of the revenue stream from operations is peeled off and held separately as a depreciation expense, that recognizes equipment and plant wears out over time. This is how the hospital has been able to upgrade equipment or acquire new equipment to expand the quality and range of services it can provide to residents. That is why business folks look for the EBITDA numbers in a financial report: Earnings Before Interest, Taxes Depreciation and Amortization.
It is a comparison equalizer for different enterprises, since those are all numbers that can vary depending on individual circumstances. It is not two-handed bookkeeping, and to state that it is displays either surprising ignorance for someone who is planning on managing the hospital better or it borders on political demagoguery.
The purpose motivating the mayor in his efforts to clarify the relationship between the SPH/SAB (service area board) and the borough appears to be that the SAB is inconvenient to deal with, and he'd prefer not to. To accomplish this end, he wants to treat all service areas equally, which assumes that they were equal to begin with.
The process under which the SPH service area came into being was not the same as the other service areas, as I understand the history. At any rate that particular question has not been adjudicated by any court, and the mayor seems bent on finessing the question through a Trojan Horse ordinance that would make the question academic or moot.
I hope local folks stand firm against it and keep some level of local control. We don't need some bureaucrat in Soldotna with monthly mood swings or who is moved by political convenience or prevailing winds deciding what will best serve the health needs of our communities.
David W. Green
Peninsula Clarion ©2013. All Rights Reserved.