Bipartisan group opposes elimination of hospital tax exemption

Bipartisan group opposes elimination of hospital tax exemption


FILE PHOTO -- MidState Medical Center in Meriden, Tuesday, March 15, 2016. | Dave Zajac / Record-Journal

HARTFORD — A bipartisan group of lawmakers stood with hospital executives Wednesday in opposition to Gov. Dannel P. Malloy’s proposal to eliminate hospitals’ exemptions from local taxes.

Lawmakers said they shared the hospitals’ concerns that local taxes, expected to cost a combined $212 million, could lead to cost increases, staffing cuts, and a reduction of services.

“There would be so much detriment to my district if we were to tax hospitals,” said Rep. Liz Linehan, D-Cheshire, one of several lawmakers to attend a press conference at the Legislative Office Building in Hartford organized by the Connecticut Hospital Association.

Malloy’s proposal would eliminate hospitals’ protection as a nonprofit organization from local property taxes, although the exemption would still apply to equipment that would qualify as personal property.

Hospitals would then be reimbursed by the state for the payments, with the pool totaling $250 million in payments. Malloy has said the change would provide some property tax relief for towns, while hospitals’ tax bills could be used to leverage more money through federal Medicaid requirements.

Hospital executives, though, characterized the proposed change as nothing more than a cash grab as the state faces a $1.7 billion deficit next year. They said the prospect of new taxes also comes as the state has cut funding to hospitals in recent years.

“We simply can’t absorb any more cuts, and we cannot revisit this debate every other year,” said John Murphy, president of the Western Connecticut Healthcare Network.

Murphy and others said the existing tax obligations, $556 million this year for a provider tax, have them struggling to meet budget obligations.

Chris McClure, a spokesman for Malloy’s budget office, said the state’s hospitals were overstating the impact, though, pointing out the hospitals collectively made $870 million over operating expenses last fiscal year.

“The hospitals would have you believe they alone are shouldering a tremendous burden on behalf of the state’s residents in order to address the state’s fiscal difficulties, and are subject to taxes so onerous that they can barely stay in business,” he said in a statement. “The provisions of the hospital provider tax are dictated by federal law, just as they are in 39 other states that levy such taxes.”

Hospitals and Malloy’s administration have maintained a tenuous relationship dating back to the implementation of the hospital provider tax.

Much like the pitch in this year’s budget, the state originally returned provider tax revenues back to the hospitals and used the payments to leverage federal funding.

The state has decreased its contributions back to the hospitals, paying just $118 million this year.

Lawmakers at Wednesday’s press conference shared hospitals’ distrust of Malloy’s pledge to fully reimburse hospitals for property tax payments.

“Unfortunately in a way, the hospitals were successful at weathering that storm and paying that tax, and I think that’s the very reason why now we see the governor proposing to take another whack at the hospitals,” said Rep. Vincent Candelora, R-North Branford.

House Speaker Joe Aresimowicz, D-Berlin, told reporters at a separate press conference that he wasn’t willing to take the proposal off the table, but is looking to find a different way to both help municipalities and find more Medicaid reimbursements for hospitals.

“We just can’t go to them every time there’s a money shortage and come up with a way to take money from them,” he said. “They should be our partner. That’s a lot of jobs.” 203-317-2266 Twitter: @reporter_savino

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