Changes this fall to Galveston County’s employee health plan might have been only the first commissioners will make to counter rising costs, officials said.
Commissioners in October approved a health plan that, among other things, increased the county’s share of heath care costs and required some retirees to pay for coverage that had been free.
The county is seeking a consultant to research and advise it on more cost-cutting changes to the self-funded plan, which cost the county nearly $2 million during the fiscal year that ended in September.
The consultant would advise the county about how to provide “competitive and cost-effective” health insurance to the nearly 1,000 people it covers, according to county documents.
That could mean major changes in the county’s health care coverage, said Arnie Wetzel, director of human resources.
Changes this year were meant to alleviate losses the county incurs through its health plan, but didn’t eliminate them.
“The county is still taking a significant loss,” Wetzel said. “The county is going to continue to pay more and more money to cover this plan and do stuff until we change and look for a better plan or better coverage or a different style of plan.”
That could include things such as changing the county’s third-party health care administrator, Wetzel said. The county has used Boon-Chapman, an Austin-based company, as its administrator since 2007.
In recent years, other governments, including the cities of Galveston and League City, that had used Boon-Chapman have switched to other administrators to cut costs.
At the same time the county is considering how to cut costs, a commissioner suggests the county could consider increasing the amount of money it pays retirees to help them shoulder the burden of the increased costs.
Commissioner Joe Giusti last week said he’d be willing to talk about changes to the health plan to make it cost less, including making a cost-of-living adjustment to retirees in next year’s county budget.
“I’m thinking I’ll maybe push that to where we do that next year in the budget,” Giusti said.
That idea was in response to criticism Giusti heard after commissioners approved a new county health plan in a 4-1 vote in October.
Among the changes was a new charge to a group of 290 retirees who received supplemental Medicare coverage through the county. The county began charging the retirees $65 a month. The group had previously not been charged at all.
The charge was part of an effort to slow increasing health care costs, county officials said. Still, it drew some objection from retirees who said the charges were a burden because they lived on limited incomes.
Reaction to the change has been measured, Giusti said. Some of the retirees he spoke to said they understood the need for the county to charge for the cost of health care. But others said the cost would be a burden.
“I do think it was probably too much at one time, especially in retrospect,” Giusti said. “You’ve got some people that are probably making $1,000 a month. It’s really tough on them.”
Giusti was one of four members of the commissioners court to vote for the health plan changes. Only Precinct 3 Commissioners Stephen Holmes voted against the change.
Giusti said he didn’t plan to ask for the health plan to be back on commissioners agenda, and was instead focused on talking about what the county could change about its plans going forward.
Commissioners are scheduled to meet Monday.
Voters won’t decide until May who the island’s new mayor will be, but candidates are already taking stances on issues fundamental to Galveston’s future, such as increasing middle-income housing and balancing the tourist economy with the needs of residents.
It will be the first time in six years Galveston is sure to have a new mayor. Mayor Jim Yarbrough is in his third term and can’t run for reelection.
So far, four people have declared their intentions to run: Craig Brown, Raymond Guzman, Bill Keese and Roger “Bo” Quiroga.
This election will come down to whether people are happy with the current Galveston leadership and with how city revenue should be spent, Brown said.
Brown is District 2 councilman, a former trustee for the Galveston Park Board of Trustees and sits on the Wharves Board of Trustees.
“I don’t think there have been concerns in my mind with how the budget has been managed,” Brown said.
Given discussion about the U.S. Army Corps of Engineers’ plan to build a coastal barrier along Galveston to protect the Houston area against storm surge, coastal protection likely will be a major topic of debate during the campaign, Brown said.
Other candidates would like to see more change.
Bill Keese wants to see Galveston more involved in state and national issues of storm protection, infrastructure projects and climate change, Keese said.
“What visionary leadership means is always putting the people of Galveston first,” Keese said.
Houston native Keese moved to Galveston about two years ago and served as a Democratic Party state representative from 1977 to 1981. He represented a Central Texas area that included Somerville and Burleson.
“I think leadership has been inching forward, measuring progress in little steps,” Keese said. “I think that we need giant steps.”
There should be a change in Galveston that allows more people to live on the island affordably, Quiroga said.
Quiroga was mayor from 1998 to 2004 and was most recently the director of economic development at the Port of Galveston until he left in 2018 during a reorganization.
Quiroga wants to focus his race on making the island a more affordable place for people to live, he said.
“It’s just too expensive to live in Galveston these days,” Quiroga said.
He wants to cut taxes and bring more industry jobs to Galveston, Quiroga said.
Guzman also wants to make the island more affordable for people and wants to make the city run more efficiently, especially the water and public works departments, Guzman said.
Guzman ran unsuccessfully for mayor against Yarbrough in 2014.
“We’re losing people to the mainland because it’s better and cheaper,” Guzman said.
Public safety also tops Quiroga’s concerns, he said.
“I think we need to get more police officers on the street,” said Quiroga, who has already received the endorsement of the Galveston Municipal Police Association.
He also wants to pay officers more, a grievance the police union aired in its most recent round of collective bargaining with the city this summer, and give them incentives to live on the island, Quiroga said.
This election also comes at a time when Galveston residents are asking questions about how much tourism is too much.
“The park board as well as the city now is looking at bigger is not necessarily better,” Brown said.
The city instead is working on having tourists spend more and stay longer, Brown said.
That involves creating better access to tourist areas so visitors aren’t driving through neighborhoods, and expanding the revenues streams of the port beyond only cruise business, Keese said.
“Whatever we do, we need to put to the citizens of Galveston first,” Keese said.
Guzman’s also interested in putting Galvestonians first by reevaluating how revenue is spent, he said.
“I’m going to change things for the best,” Guzman said. “I will do it for the sake of Galveston.”
Candidates still can’t officially place themselves on the ballot until January, so the field of candidates for mayor could expand.
City leaders have kept only scant financial information about a special tax zone formed to help fund the luxury Harborwalk development, even though state law requires detailed annual records be created and maintained about such zones.
In response to a Texas Open Records Act request for three years of annual financial reports, records of payments, meeting agendas and minutes, the city produced a total of 11 documents, most of them agendas and a few meeting minutes.
Financial details of the zone’s operations are at the core of a dispute about how much tax money the public owes to reimburse Harborwalk developers for their costs of building roads and installing utility systems at the upscale bayside community where homes sell for $1 million or more.
That number is somewhere between about $200,000, in city records, and $12 million, about two and half times more than the city’s total annual budget, according to a developer.
But it’s impossible for an outsider to determine who owes how much to whom using the city’s skeletal financial records, an authority on municipal government and tax zones said.
Aside from eight pages of minutes and agendas, the city in response to a request for financial records covering fiscal years 2017, 2018 and 2019 supplied two spreadsheets of about 100 pages, all dated as being for the 2019 fiscal year. The documents don’t explain what they purport to show.
“The spreadsheets seem like they show the revenue to the TIRZ, not the expenses,” said Steven Craig, a professor of economics at the University of Houston, who specializes in municipal government. “But, it’s possible there is an accounting trick with which I am not familiar.”
The city designated about 850 acres that includes Harborwalk, on West Galveston Bay south of state Highway 6, as a tax increment reinvestment zone in December 1999.
Reinvestment zones, originally meant to attract developers to blighted areas, are governed by a whole host of state laws, including one stipulating that cities or counties forming TIRZes must submit annual reports about the project’s progress to taxing units, as well as the Texas Comptroller of Public Accounts.
But none of the financial information the city produced in response to the public information request shows how much tax revenue from the high-end houses at Harborwalk was used to reimburse the developer and how much is outstanding; not clearly so, anyway, Craig said.
That question is at the core of an ongoing dispute between city leaders and Harborwalk LP, original developer of the upscale community, which argues it’s still owed millions of dollars for improvements it made.
But the specifics about exactly how much the developer argues the city still owes, and how much the city has paid are unclear because neither side is talking and the financial documents don’t enlighten even an expert outsider such as Craig.
One financial report lists $496,200 as still being due to the zone as of Oct. 31, while another lists $197,100, according to city documents. But the financial reports only purport to show revenues, not expenses, so it’s difficult to determine how the figures $496,200 and $197,100 were derived, Crain said.
Harborwalk LP, which originally developed 380 lots, a 150-slip marina and yacht club at Harborwalk, invested more than $12.7 million into public improvements that were supposed to be reimbursed through a tax increment reinvestment zone, Evan Watkins, son of Harborwalk LP principal Lynn Watkins, stated in an email.
“Ever since the March 2017 TIRZ board meeting, it has felt to us almost like the city is trying to avoid reimbursing the developer at all under the terms of the development and financing agreement,” Watkins wrote in a 2018 email to Dorothy Childress, who was mayor at the time, and the reinvestment zone board.
New City Administrator Marie Gelles declined to comment about the dispute or how much the city might still owe.
And the other parties in the dispute, such as Evan Watkins, also declined to comment about the matter, except to disagree about who’s responsible for maintaining records.
“Please note that Evan Watkins is the secretary of the TIRZ board and is the person to contact for any other information on the subject,” wrote Ruth Ann Sorrell, interim city secretary, explaining the lack of financial documents the city produced.
Evan Watkins, however, said record-keeping was the city’s responsibility.
“I believe the city has sole responsibility for administration, management and operation of the zone and the city should be maintaining the minutes and other records for the TIRZ, the same as they do for all other city boards and commissions,” Watkins said. “This position was made clear to both the mayor and the city attorney in April 2018.”
Sorrel gave The Daily News agendas for meetings in October 2016, March and April 2017 and March, April and November 2018, but only minutes from the March and April 2017 meetings as well as the November 2018 meeting.
Use of reinvestment zones has expanded beyond the original intent to sponsor development in blighted areas to more and more underwrite development in general with public dollars. In cities such as Galveston, they have been a source of controversy and lawsuits, especially those that struggle.
In such zones, developers advance money to make public improvements such as roads and utility systems in private developments and receive reimbursement, including interest either from increased tax revenue in the zone or government-issued bond proceeds.
As new construction in a zone occurs, the resulting incremental increase in tax revenue is returned to the zone for a set period of years.
For example, if the assessed value for a base year was $6 million and improvements to the area increased the value to $7 million, the taxes collected on the additional $1 million are earmarked for the reinvestment zone to pay back developers for public improvements. The idea is to attract development and increase the city’s tax base.
“The TIRZes are a big problem,” Craig said. “Only one of which is their economics. Their governance is also poorly conceived.”
Just one year ago, the city of about 7,900 people was in financial trouble. In March 2018, the council voted to cut operating expenses by $860,000 to stay out of the red after more than a year of declining sales tax revenues.
But the city recently ended its 2019 fiscal year with about $4.96 million in revenues and about $3.4 in expenditures, for a total surplus of about $1.55 million, records show.