Budget silence on Lakes District Hospital replacement project

There was no mention of an approval for the replacement of the Lakes District Hospital in the 2012 provincial budget.

Nechako Lakes MLA John Rustad is remaining optimistic that funding for a replacement to the aging Lakes District Hospital will flow through from the province’s 2012 budget, but it is a process that he said, could still take months.

There was no mention of an approval for the replacement of the Lakes District Hospital in the 2012 provincial budget, which was released last month, however Rustad said that this is to be expected.

“It would be very unusual for specific capital projects, like the replacement of the Lakes District Hospital to be announced directly in the budget,” he said to Lakes District News.

He said a decision about the project will now take several months to flow through governmental processes.

“I am pushing for the hospital replacement project to be approved … I want to make sure that we don’t lose out on this and that the project doesn’t get forgotten,” he said.

According to Rustad, the good news is that there is additional dollars for capital spending for projects around the province that was announced in the budget.

He said, “If this additional capital had not been approved, the outcome for the Lakes District Hospital replacement project would not be so great.”

Rustad also said he didn’t think the request made by Northern Health to lower the required 40 per cent capital contribution to 20 per cent in the final project submission to the Treasury Board will be a stumbling block to getting the project approved.

As reported in the Lakes District News edition of Sept. 21, 2011 the cost of the replacement project is estimated at approximately $50 million dollars and as per provincial requirements, the Stuart Nechako Regional Hospital District is responsible for contributing 40 per cent of the total cost towards the project.

The first proposal submitted to the province by Northern Health had included two funding scenarios, one at a 20 per cent capital contribution and the other a 40 per cent contribution, however in December 2011 the province had requested that Northern Health choose just one funding scenario for submission to the Treasury Board.

Hans Berndorff, Stuart Nechako Regional Hospital District treasurer explained Northern Health’s decision to the board recently.

He said that the decision to proceed with the 20 per cent funding scenario was made due to Northern Health’s awareness of future funding challenges for the hospital district.

“The Stuart Nechako Regional Hospital District is one of the smallest regional hospital districts in B.C. and has a limited tax base, which has resulted in one of the highest tax rates in the province,” Berndorff explained.

The boundaries of the Stuart Nechako Regional Hospital District include most of the central and eastern portions of the Regional District of Bulkley Nechako, including Burns Lake, Fraser Lake, Fort St. James, Granisle and Vanderhoof together with electoral areas B, Burns Lake rural, C, Fort St. James rural, D, Fraser Lake rural, E, Francois Ootsa rural and F, Vanderhoof rural. The sole purpose of the Stuart Nechako Hospital District is to provide a portion [which is usually 40 per cent] of the funds required by hospitals within the boundaries for equipment, renovations and new construction. This funding is raised through property taxes.

Bendorff said, “The average tax rate increased from 45 cents per $1,000 [property value] from 2001 to 2004, to the current rate of 72 cents per $1,000 in 2011, one of the highest in B.C.” He attributed the increase to the contributions made to capital reserves for the Lakes District Hospital Replacement project.

He said the Stuart Nechako Hospital District would have been able to afford the 40 per cent capital contribution if the Lakes District Hospital was the only acute care facility replacement on the horizon. However, the Fraser Lake Diagnostic and Treatment Centre will have to be replaced in 2017 at an estimated cost of about $4 million and the Fort St. James Hospital will have to be replaced by 2018 at a cost of about $38 million.

“The Vanderhoof Hospital will have to be replaced by no later than 2030 and while there is no cost estimate for this yet, it will surely cost more than $100 million. The Stuart Nechako Hospital District could not possibly afford to contribute 40 per cent to these hospital replacement projects without extreme increases in taxation,” he said.

According to Berndorff funding all four projects at the required 40 per cent capital contribution could result in a tax rate of $1.67 per $1,000 starting in 2021.

“This tax rate, which is more than double the highest tax rates in the province, is clearly not sustainable,” he added.