DALLAS — Louisiana lawmakers will consider a resolution this week to require legislative approval of a plan to issue revenue bonds to finance a proposed new state hospital in New Orleans.
The resolution, which has been assigned to the Appropriations Committee, would require a majority of both chambers to approve bonds and financial agreements for the construction or operation of the planned $1.2 billion, 424-bed University Medical Center.
Rep. Cameron Henry, R-Jefferson, and four co-sponsors introduced HCR 59 after last week’s committee hearing on the facility proposed to replace storm-damaged Charity Hospital. At the May 2 hearing, chairman Jim Fannin, D-Jonesboro, was skeptical of the current financial plan.
Under the plan, developed in 2010, the hospital probably would not be able to attract the level of insured patients needed to be financially viable. The analysis said the facility would require state support of at least $100 million a year.
The current financial plan includes $400 million of hospital revenue bonds to build the new hospital.
Jerry Jones, head of the state facilities office, said bonds may not be necessary if some of the complex’s facilities are built by private partners and then leased back to the state.
The facility would replace Charity Hospital, which was devastated by Hurricane Katrina in 2005. It would be part of the Louisiana State University system, and serve as a training hospital for LSU, Tulane University, and other area medical schools.
Bobby Yarborough, chairman of the UMC Management Corp., set up to finance and operate the hospital, promised Fannin that a new, more comprehensive financial report will be available when the governing board meets June 2.
The corporation was established to issue debt for the facility so the bonds would not count against the state constitutional cap on debt service.
Commissioner of Administration Paul Rainwater said Gov. Bobby Jindal opposes the resolution. However, Jindal could not veto the measure as it is not a law but an expression of legislative intent.
According to Rainwater, the hospital project has undergone legislative review and would be operated by an independent entity.
“While we understand the intent of the resolution, the best way to ensure we construct a world-class academic medical center in a fiscally responsible way is through continued strong oversight and analysis by the independent management board,” he said. “So again, while we appreciate the intent, the resolution seems redundant and unnecessary.”
The 2006 Legislature approved $225.5 million of general obligation bonds for the hospital as part of a $381.6 million capital-outlay appropriation.
The state has also received $474.8 million in insurance payments and reimbursements from the Federal Emergency Management Agency for flood and storm damage to Old Charity Hospital’s structure, and expects another $130 million from FEMA for replacement of damaged equipment.
