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My
Turn To Speak on Hale Debt
Former Haverhill Mayor Jim Rurak
(04/04/07)
 Never
mind that the mayor blames me for the Hale Debt, even
though he was a hospital trustee when it accumulated.
Never mind that he uses it as an excuse to justify
neglect of essential services (note, people not feeling
safe at night downtown; note, a senior center roof that
leaks badly; note, low MCAS scores and high drop-out
rates; note, the policy that we have to accept any and
all kinds of growth and that we have to sell everything
the city owns; and many more).
Never mind that des-pite the “albatross” that
he calls it, he seems be-fuddled about how to clip its
wings. Give me the chance to present another view. The
Haverhill Gazette editorial put it clearly when it asked:
Why did we learn first, last September, from Jim Rurak,
and not until March from the mayor, that the city has a
cash surplus?
The answer is: We’re better off financially because
we’re no longer in the hospital business, and,
because we still have a hospital. The mayor doesn’t
want you to know this, but I do. He keeps it from you so
you’ll be satisfied with his poor performance. I
want you to know so you’ll demand more for your
city.
But first look at the balance sheet. When I was mayor, I
managed to improve city services, but the Hale Hospital
had a budget of over 40 million dollars, or, almost one
third of the total city budget. At any moment it could
lose money, and, when it did, the city had to cover its
losses. To be mayor with the city-owned hospital was like
having a financial snake by the tail. It was a great
facility, but its balance sheet could bite you at any
time. And it did in 1986-88. Note, I’m not talking
about 2001 when I privatized the hospital. I’m
talking about the years right after the new hospital
building was finished.
The hospital lost over $5 million, the city covered $2
million of it and put the rest into the hospital’s
books. The city did the right thing, but the annual debt
service on the hospital began to accumulate right after
it was built. The 6 million dollar debt that the city now
has goes back almost to day # 1 of the new Hale; it
didn’t start with me. The city’s hope back then
was that future hospital profits would amortize all its
debt. What happened on my watch was that, like in the
late ‘80s, the hospital began losing money badly.
But unlike the ‘80s when it was reasonable to think
that the hospital could eventually dig itself out, I knew
in 2001 that city-owned hospitals could not compete. So I
chose not to stall, or put new debt on the hospital
a-gain. That would have made matters far worse later. The
city had to accept the debt and either close or sell the
hospital. The key is that the city already had the
obligation to pay the debt. The is-sue was whether it
would further risk its credit by hoping the hospital
would pay it off. My answer now, as it was then, is NO!
We set a firm date to close or sell the hos-pital knowing
full well that in either case the city was obligated to
cover the 6 million dollar debt annually. The difference
between closing and selling was this. If we sold, the
city would still have a hospital, and, the city would
have no further financial risk. The fact that we sold
eliminated the risk and reduced the debt on day number
one, namely, August 31, 2001.
It reduced the debt because the hospital we were once
subsidizing began paying property taxes. They amount now
to nearly a million dollars a year. Never mind the jobs,
never mind the award winning health care!
The reason we have a surplus is that we plugged the leak
in 2001. The financial snake we had by the tail is now
safely under foot. The hospital which was a forty million
dollar wild card, or 30 % of our budget, is now a stable
4% of our budget.
We can plan for our future and set priorities again. This
is not just about me and what I did in 2001. It’s
about how we think about setting our goals right now. The
debt is a decaying remnant of a monster that once
threatened our financial stability. If we don’t
believe we’re better off now, we never will be.
Jim Rurak is a professor at Boston College and is the
former mayor of Haverhill. He is seeking to unseat Jim
Fiorentini in the fall election. You can eamail your
comments or questions to Jim Rurak at JARandKAS@comcast.net.
*Send your questions comments to ValleyPatriot@aol.com
The March 2007 Edition
of the Valley Patriot
The Valley Patriot is a Monthly
Publication.
All Contents (C) 2007, Valley Patriot, Inc.
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