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Will sales tax addition cover TRMC costs?

Residents in the city of Troy might have noticed some of their purchases Monday seemed a bit higher — because they were.

The Troy City Council approved an additional one-cent sales tax to fund the city’s operations of Troy Regional Medical Center in January, and that tax took effect Monday.

This means, those who normally spend $7 eating out at lunch, paid $7.63 Monday, compared to the usual $7.56. Those who do this three times a week over the course of a year will spend $10.92 extra in sales taxes with the implementation of the extra 1-percent sales tax, totaling 3 percent in the city of Troy. Collectively, Troy shoppers will pay 9 percent in sales taxes, 3 percent for the city, 2 percent for the county and 4 percent for the state.

The sales tax increase was passed to assist the city of Troy in operating the hospital, a hospital that on average takes around $2.2 million per month to operate.

Troy City Clerk Alton Starling said the city is estimated to generate around $2.7 million annually from the additional tax. The additional funds, hospital officials hope, will come from operating revenues.

But, with ownership transition still underway, its hard to tell exactly what the hospital’s budget is, said CFO Janet Smith.

“Being a public hospital will change certain operating expenses, as well as the reimbursement structure for several of our payors,” Smith said.

These monthly expenses include routine things like payroll, supplies, leases and rentals for equipment, insurance and purchased services like legal fees and physical therapy contracts, Smith said.

“We will have a better idea of the exact shortfall once our operating budget is complete, but ultimately the operations of Troy Regional Medical Center will depend on the community and how we can maintain and grow our existing volume.”

Since the city of Troy has taken ownership, it has cost around $2.6 million in the first month.

Smith said the amounts drawn from the city, which are from a $6 million line of credit, will be higher initially.

That’s because TRMC has received no reimbursement from insurance companies or Medicaid or Medicare since the city took ownership, as they go through a “change in ownership” process. This change will likely be approved mid-April.

“The city has had to fund all of our costs to date because of this delay,” Smith said.