Renewal of a controversial hospital taxing district nearly slid under the radar at the Marathon City Council’s March 25 session. After a stern outcry from residents, that decision will now head to a special call meeting on Monday, March 31.
Established in 2018, the Middle Keys Health Care Municipal Services Taxing Unit (MSTU) is a $15 million pledge from Middle Keys taxpayers in support of Fishermen’s Community Hospital in Marathon. Initially billed as a special taxing district in support of brick-and-mortar construction for the hospital, destroyed by Hurricane Irma weeks after Baptist Health South Florida’s purchase of the facility, the MSTU eventually shifted to subsidize the cost of uninsured and underinsured “indigent care.”
Annual reviews and city council votes to continue including Marathon taxpayers in the special district have seen varying degrees of opposition from residents and council members, and continued participation passed in 3-2 and 4-1 votes in 2023 and 2024, respectively.
The original 2018 ordinance provides that the city council “shall annually review (the) MSTU at its first meeting in March.” But the 2024 renewal took place in February, and discussion of the taxing district was not listed on Marathon’s published agenda for Tuesday’s meeting – originally scheduled as the council’s only meeting in March, due to Florida Keys Day in Tallahassee.
In a radio appearance on March 24, City Manager George Garrett told Florida Keys Media’s Morning Magazine to expect the unpublished discussion in Tuesday’s session, prompting a reaction from concerned Marathon residents.
Referencing multiple emails received that day regarding the tax after word spread on social media, Vice Mayor Jeff Smith told those in the room he “gave clear direction that I wanted it on the agenda, and it got omitted.”
“There’s a lot of other things going on, and with discussions I was having internally, I missed the fact that this had to happen in March,” Garrett told the council. “My apologies both to you folks, and obviously to the public that’s listening in.”
Reports over the past year have conflicted regarding the exact timeline and amount remaining from the initial $15 million commitment. In February 2024, Fishermen’s Hospital CFO Patti Boylan told the council that she expected the taxing district to hit its mark by February of 2025, and that additional funds collected during the 2024-25 tax year could theoretically be returned to the residents of Duck Key, Key Colony Beach and Marathon.
At press time, Monroe County Tax Collector Sam Steele told the Weekly his office has so far distributed a total of $14,438,498 from the taxing district. According to the original MSTU ordinance, any revenues collected “shall be used solely for payments to hospital operators for delivery of hospital services.”
Monroe County originally adopted the MSTU with the support of Key Colony Beach and Marathon to “opt in” to the district. Because of that structure, City Attorney Steve Williams told the council, while Marathon can informally request a lowered tax rate for the 2025-26 tax year to bring the total MSTU revenues as close to the $15 million mark as possible – negating the need for refunds of excess taxes – the city only has two legal options: opt in to continue the tax, or opt out.
“You have no authority to lawfully alter the millage or put any other conditions on that thumbs up or thumbs down,” Williams said. “Key Colony Beach has already (requested the change), and there’s no harm in us doing the same, but your only true vote is in or out.”
“For me personally, it’s a deal we need to fulfill, because what kind of city will we be if we make a deal for something and then halfway through back out?” said Mayor Lynn Landry, speaking in favor of a continued tax with a lower millage rate. “While it’s not perfect, we have a hospital. My family has been there quite regularly, and they give great care.”
“I think we got seven or eight emails within an hour of the public knowing that this was on the agenda,” said councilman Kenny Matlock. “Good luck finding a majority that thinks we should keep paying that tax. I don’t feel ethically obligated to someone else’s deal, and it comes up before us once a year for a reason: to be renegotiated. I feel like they got what they needed, they got out of a hard spot, and we got through Irma.”
“Without a hospital, I would hate to think what would have happened after Irma,” said Smith. “When Baptist did step in, the hospital was broke and couldn’t even make payroll. Before we did this, they came to the rescue to keep the hospital open because that’s part of their mission statement.”
Discussion of the MSTU is the only item scheduled for Monday’s meeting, set for 5:30 p.m. at City Hall.
For additional coverage of the March 25 Marathon City Council meeting, see the April 3 edition of the Marathon Weekly and keysweekly.com.
