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Revenue Resuscitation, Debating Malloy’s Hospital Tax To Cure City Finances

February 14th, 2017 · 12 Comments · Analysis and Comment, City Budget, City Council

Is Governor Dan Malloy’s hospital tax proposal just what the doctored ordered to aid fiscally troubled cities? Malloy’s two-year, $40 billion budget proposal calls for a new property tax on hospitals expected to raise more than $200 million statewide with about $20 million of that earmarked to Bridgeport from its two acute care facilities. It’s a work in progress with many unanswered questions that faces potentially fierce opposition from the Connecticut Hospital Association.

Basically Malloy is saying we’ll place hospitals on the local tax rolls, but hospitals will be made generally whole through increased medicaid reimbursements, some of which would come from the federal government.

Currently Bridgeport receives payments in lieu of taxes for tax-exempt properties but not nearly the amount if hospital institutions that serve regional patients were assessed and fully taxed on the city’s grand list of taxable properties. City bean counters are reviewing Malloy’s spending proposal to determine how it will impact the municipal budget Mayor Joe Ganim submits to the City Council the first week of April.

After a cranky first-year budget, Ganim wants to hold the line on taxes for the budget year starting July 1, or preferably reduce the city’s 54.37 mil rate to provide relief to taxpayers and build confidence with potential investors turned off by the financial result of last year’s property revaluation. Ganim’s initial read on Malloy’s budget is positive, but there are many tricky parts as the spending plan makes its way through the state legislature. Sometimes governors give you here, but take there. That’s the the key, are we gaining versus losing?

Jennifer Jackson, chief executive officer of the Connecticut Hospital Association, issued a rebuke of Malloy’s spending plan:

We strongly oppose this new tax on hospitals.

Taxing local hospitals is a direct attack on the fabric of our communities.  We’ve been down this road before, with a budget gimmick that already resulted in more than $2 billion taxed and cut from hospitals. The hospital tax has increased costs for patients, caused the loss of thousands of healthcare jobs, extended wait times, and reduced access to care for those who need it most.

Our local hospitals are the cornerstones of our communities, providing tens of thousands of jobs and serving as a literal lifeline to the people we serve.

We will vigorously fight any new attempt to tax hospitals.

Fiscally troubled Hartford with three hospitals would benefit the most under Malloy’s proposal. Senate President Martin Looney, who represents New Haven and spearheaded uniformity in local car taxes that benefits higher-taxed city residents, will be a key figure in budget deliberations. Imagine Yale New Haven Hospital fully on the tax rolls? So city financial advocates view Malloy’s hospital proposal as a potential windfall.

Bridgeport State Rep. Steve Stafstrom whose Black Rock and Brooklawn constituency was largely hammered by the revaluation, supports the governor’s budget including the proposed revenue increases from hospitals.

These are challenging times and the Governor proposed some big changes, particularly regarding the relationship between the state and our cities and towns. I am very encouraged that the Governor has placed an emphasis on investing in our larger cities, including Bridgeport. He made a point to stress the inequities in our state’s regressive property tax structure and education coast sharing formula, which penalizes cities like Bridgeport and results in higher taxes, less spending on education, and reduced services.

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12 Comments so far ↓

  • Andrew C Fardy

    We in Bridgeport and other large cities have been buried under this pilot program for years. Hospitals cost Bridgeport millions in lost tax revenue. Here is an example, Bridgeport hospital a number of years ago went to a Bridgeport land board seeking changes in property they now owned on Williston St. Why would they own a multi-family dwelling in a working-class neighborhood? Bpt Hospital owns every property on one street that is used by the hospital.

  • Jeff Kohut

    Shortsighted move. What about other institutions that parasitically siphon off the resources/infrastructure of cities, and indeed, often add disproportionate, undue stress on city services and infrastructure, such as universities that house students in cities, but lend their names/institutional value to other towns while suppressing any connection to the city providing the most, essential support. [Yes: I'm thinking about Sacred Heart University's deplorable treatment of Bridgeport, a lot of our PD OT (et al.) can be attributed to babysitting drunken Sacred Heart scholars.]

    It is stupid to go after hospitals that provide tremendous practical and institutional value to cities. It will hurt city residents, and regional residents, in the long run, as hospitals charge more, cut services, and incorporate more cost-cutting measures into their modus operandi as they adapt to the worsening national/state healthcare nightmare and the additional burden of local taxes.

    A stupid budget gimmick by a stupid governor who has painted himself into a corner by stupid fiscal and economic development policy.

    There are much better targets than hospitals. How about cutting state aid to suburbs benefiting from hospitals (and other regional institutions based in cities) proportionate to their use of these institutions and city infrastructure, and then infusing the cities with that additional $? (All the towns sending prisoners to our adult and juvenile jails should be charged, or state aid in an appropriate amount diverted from those towns to Bridgeport.)

    The mayors of cities and state representation of cities in Connecticut should not be applauding this latest Malloy idiocy. (Soon we’ll have to go to Boston for in-patient hospital treatment.)

    The “Genius of Connecticut” has turned into the Babbling Idiot of New England.

  • barry soitera

    Why should hospitals be held hostage due to the Democrats spending more money than they take in? Are there any institutions or private companies left more to take from?
    Who’s going to pay? It’s the middle class again. The illegals won’t. Hospitals will pass the cost on to the consumer. Basic economics.

    • The Phantom

      Well said, Barry! Imagine that, liberals running out of everyone else’s money. That’s how liberalism works. The same zombie voters who voted for Malloy have now become whiny crybabies. What in hell did you expect? For him to not tax us to death? Anyone with half a brain could see this coming.

  • Andrew C Fardy

    When a bona fide way of raising taxes to help the large cities, you have your professional know-it-all JK crying the hospitals are getting screwed. BTW Jeff the out-of-towners should also pay. Jeff, where else can we get $20 Million? What’s your answer to all the taxable property these hospitals have bought up and taken off the tax rolls?

  • John Marshall Lee

    It might be interesting to have a discussion about the way taxes of different types fall on different parties, and the way, or so it seems, some people or entities escape taxes of many kinds.
    Is freedom from property taxation or income taxation that ultimately funds public services that provide safety or other quality of life fair across the board? Or are changes necessary? Is it more fair and possible to locally tax entities that escape property tax today for 50% of City services because “education” costs 50% or thereabouts and only benefits families who own or rent? And State’s fair share? In the courts?
    Grading changes into any laws that change current rules? Keeping an eye on metrics that will indicate how tax changes as a new expense impacts institutions? Maybe if more people and institutions are affected by the expense of government, we may decide to consume less and hold voting representatives more responsible for their decisions. Time will tell.

  • Donald Day

    The highest-compensated hospital leader continued in the 2015 fiscal year to be Yale-New Haven’s CEO Marna Borgstrom, who earned $3.61 million, according to data released this week by the state.

    The second-best paid hospital executive was also in the Yale-New Haven system, Norman Roth, who served as president of Greenwich Hospital and chief operating officer of Bridgeport Hospital. He earned $2.85 million.

    Yale makes voluntary payments to the City of New Haven. As of fiscal 2014, Yale paid $2.7 million for fire service and $5.6 million in additional voluntary payments. Yale also owns 2.5 billion dollars of assessed property in New Haven and it’s a for-profit entity so why shouldn’t they pay taxes? Finally, how many millions of dollars does it pay Bridgeport?

    • Frank Gyure

      Donald Day. Great point, and we need to remember the hospitals and private practices are now extending beyond the boundary of one municipality. I go to a doctor in Fairfield CT but that practice is part of the Northeast Medical Group which is part of the Yale-New Haven Group of which Bridgeport Hospital is part. St Vincent’s Hospital is now controlled by Ascension Health, the nation’s largest Catholic and largest nonprofit health system, which is in turn controlled by several religious orders, including the Daughters of Charity of Saint Vincent de Paul, which founded St. Vincent’s Medical Center.

  • Jeff Kohut

    Andy: Re-read what I said.

  • Frank Gyure

    I do not like to use the conditional (if, should’ve, could’ve, would’ve) but the State should look at all the various categories of tax-exempt, reduced tax, PILOT programs, properties etc. Maybe look at today’s “welfare queens, “high income filers,” corporations, etc.

  • Common Good

    Does anyone know how much Bridgeport would receive if the Hospital, University and State-owned property PILOT were fully funded under the statute? According the 6/30/16 Single Audit Report on the City’s Finance Website Bridgeport received $2,353,126 for state-owned property and $7,499,641 for Universities and Hospitals. I cannot easily find what percentage of PILOT is actually funded, but as an example say the figures above represent 60% of what should be received, Bpt should receive an additional $6,568,000. And State-owned property does not include the two highways that run through our small footprint.

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