Hospital tied to store's tax in McGehee

McGEHEE -- McGehee could lose its hospital if plans to close a Wal-Mart in the city come to fruition, according to local officials.

Wal-Mart generates as much as 60 percent of sales tax revenue that helps fund McGehee-Desha County Hospital, according to John Heard, CEO of the hospital.

Wal-Mart is considering closing its McGehee store and might build a supercenter in Dumas, about 19 miles away, according to state Sen. Jimmy Jeffress (D-Crossett).

Jeffress withdrew a bill in the state Legislature last month that would have allowed the two cities to share sales tax revenue, because Dumas' tax revenue is already earmarked for capital projects.

Jeffress and McGehee Mayor Bain Poole presented a case for saving the McGehee Wal-Mart to Wal-Mart executives. The plan calls for Wal-Mart to add a grocery component to the McGehee store, which could make the store profitable.

The hospital gained the sales tax in a 1999 election after financial woes had forced the facility to borrow money.

"We had to borrow from local banks just to make payroll and keep emergency services available," Heard said. "The city came through for us and got this sales tax."

The city bought a half-interest in the hospital at the time, so it could fund the facility with the tax revenue.

The tax generates as much as $500,000 a year, about 10 percent of the hospital's annual operating budget. Without Wal-Mart's contribution to the tax revenue, the hospital would have no choice but to cut jobs and services, Heard said.

"Something like this would really be detrimental to the community and the hospital," he said.

The hospital has 25 beds and offers 24-hour emergency room services. With 116 employees, the hospital is the largest employer in the community.

"It's a major player in our community," Poole said. "People just don't want to move to a community that doesn't have a hospital."

In addition to McGehee, McGehee-Desha County Hospital serves people in Arkansas City, Dermott and other parts of Desha County, Heard said.

The city also collects a 1-cent sales tax that contributes to the city operating budget. While the city would also be affected by the lost revenue, the hospital would feel the greatest impact.

"We can just cut back on a number of things," Poole said. "The Police Department would have to cut back, the Fire Department and all public services. Garbage collection, instead of picking it up twice a week, we'd go back to doing it only once. We could make those adjustments if we had to, but the hospital can't stand those kinds of cuts."

Some McGehee residents are upset at the prospect of losing retail and medical facilities.

"I don't know what we would do," said Janet Finley, nursing director at Southeast Arkansas Home Health Agency. "There's not much here as it is."