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Malloy Receives Award, But Can’t Make Promises

by Hugh McQuaid | Dec 13, 2012 1:05pm
(10) Comments | Commenting has expired
Posted to: Nonprofits, State Budget, Norwich

Christine Stuart photo

Gov. Malloy receives award from the Connecticut Community Providers Association

When social service provider David Burnett stood Thursday to ask Gov. Dannel P. Malloy not to cut from the social safety net, Malloy was ready with an answer. He fielded a similar request earlier that day during an appearance on WNPR’s Where We Live.

Burnett is the CEO of Reliance House, a Norwich-based nonprofit mental health service provider. He and a group of his colleagues gathered for the Connecticut Community Providers Association’s 43rd annual meeting in Hartford.

They presented Malloy with an award for preparing Connecticut for the implementation of the Affordable Care Act.

But the award comes at an awkward time for both parties. As Malloy and legislative leaders negotiate a deficit mitigation plan to close the state’s $365 million deficit, the governor made clear that everything except for raising taxes is on the table. That includes state aid to the nonprofit provider community. Some say a scheduled 1 percent increase in the cost-of-living allowance for providers may be on the chopping block.

In a carefully worded appeal, Burnett told Malloy the community was scarcely getting by as it is. He said Malloy understood the nonprofit sector.

“I want you, however, to think about one set of circumstances in Eastern Connecticut: 15 years of less-than-adequate cost-of-living adjustments through the ‘90s and the first six years of this century, five years of level funding — purchasing power at my agency during that period reduced by perhaps 40 percent,” Burnett said.

The information Burnett presented to Malloy was the same information Malloy heard from a caller who identified herself as “Stephanie” during Malloy’s appearance on WNPR earlier in the day. She said she worked for a nonprofit provider in Norwich.

“Our co-workers, they work at the bare minimum. Our hands are so tied already . . . Last year our healthcare costs rose by 39 percent. This year we have a potential for 32 percent increases,” she said.

Burnett said he didn’t know what the governor should do with the information they had provided. But he asked Malloy to do the best he could to help nonprofits.

“You’re very kind to put it that way,” Malloy answered. “Because I struggle with the obligations of this office on a regular basis.”

Malloy said he has to balance a variety of interests as governor. He said decades of bad fiscal decisions by the state have left him in a situation where he is trying to solve everyone’s problems. He said he knew Burnett’s agency and would do what he could.

“Whether I do a good job or not, I can’t answer. But I can tell you I’ll do the best job I possibly can,” Malloy said.

“Thank you and good luck,” Burnett said.

After the event, Malloy said he couldn’t say whether the 1-percent cost-of-living adjustment for providers would be among the cuts to which he will agree.

“There are discussions ongoing between legislative leadership and the executive branch and we both agreed not to talk about those things,” Malloy said. “But suffice it to say everything’s on the table . . . I’m well aware of how these folks have been treated by prior administrations in good times. I’m interested in getting to a point where we’re treating our strategic partners better.”

But the problems such a cut would create for providers would extend beyond going another year without a cost-of-living adjustment. Many are depending on the additional revenue and have written those increases into employees’ union contracts.

That’s the case for Diane Manning, president and CEO of United Services Inc., a behavioral health and social services provider in eastern Connecticut. Her organization has about 250 employees who are represented by SEIU District 1199.

“I have a contract negotiated with 1199 that increases my health insurance cost 1 percent of payroll as of January 1. That’s where my 1 percent [COLA increase] was going . . . to pay for their health insurance increase. That’s gone. So that means we cannibalize something else, another position, another service,” she said.

Manning said that without the 1-percent COLA bump, she will have to find a way to come up with roughly $50,000 somewhere else.

“That’s a cost I cannot not pay. It’s the union’s contract,” she said.

Andrea Barton Reeves of HARC also said she was worried about not getting the increase. She said she already had agreed to pass the new funds on to her employees.

“We’re talking about people who make on average $11.44 an hour and whose families are already relying on public services like Husky, and who will become even more vulnerable and reliant on public services without getting this increase,” she said.

She said she thought Malloy understood the dilemma nonprofit providers are facing, but said it was important he knew the impact he’s having on people who receive services.

“The fact of the matter is, no matter how dire the budget situation is, it still can’t be balanced on the backs of people who either deliver direct care or receive direct care. I know he knows that,” she said.

Stephanie, the Where We Live caller, said during the show that the people who she serves are getting hit with the current cuts.

“We’re extremely nervous about the future and more cuts and it impacting the community at large,” she said.

Malloy said he didn’t enjoy being in the position to have to make cuts. But the reality is that Connecticut and 31 other states need to tighten their belts, he said. Those cuts need to be spread across all state services, he said. The governor tried to put the budget deficit in context. He said the shortfall was somewhere between $365 to $400 million

“That’s out of a $20 billion budget. So everyone’s got to put these things in perspective. As bad as it is, it’s a lot better than it was two years ago,” he said, adding that his administration has increased spending in the social service area.

Malloy said given how Medicaid funding is being distributed, a lot of the agencies that provide social services are seeing more money come in. He said we “stuck our neck out” in Connecticut and decided to cover more people under Medicaid, who make up 55 percent of the poverty rate. Now there is a lot more money being spent on the program than anyone anticipated, he said.

“We certainly have to help these agencies get through this but there also has to be an understanding that we need to trim our sails by about 1.5 percent,” he said.

Earlier in the interview, Malloy downplayed the severity of the budget shortfall.

“We’re going to get through this folks. Everybody take a deep breath. This is not Connecticut’s ‘Fiscal Cliff,’” he said.

Christine Stuart contributed to this report

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posted by: JAM | December 13, 2012  2:20pm

” He said Connecticut “stuck our neck out” and decided to cover more people under Medicaid, who make up 55 percent of the poverty rate. Now there is a lot more money being spent on the program than anyone anticipated, he said.”
This statement pretty much sums up why we are where we are. The budget was a bet that the economy would roar back. Given the facts at the time, he bet a long shot - and lost.
Along the way he managed to immunize the state work force and structure from any of the consequences. As a result more money will stay inside the halls of government, and much less will be returned to the community from where it came.
State Government is becoming an entity that has no other purpose other than its own perpetuation.

posted by: ALD | December 13, 2012  5:26pm

I think you’ve summed that up pretty well JAM

posted by: Lawrence | December 13, 2012  7:08pm

“State Government is becoming an entity that has no other purpose other than its own perpetuation.”

Except for that fraction of DSS applications that aren’t processed in a timely manner… or that $500k loan to the private sector to move and expand their business… or supporting private-sector non-profits… or—Oh, Hell, just read a newspaper about all the horrible things that will happen when the state has to cut spending next week.

Because all the state does is ‘perpetuate’ itself, right??

Standard Chris Powell/Tea Party talking point, easily disproven.

posted by: perturbed | December 13, 2012  11:29pm

perturbed

<blockquotre>Malloy said he didn’t enjoy being in the position to have to make cuts. But the reality is that Connecticut and 31 other states need to tighten their belts, he said. Those cuts need to be spread across all state services, he said. The governor tried to put the budget deficit in context. He said the shortfall was somewhere between $365 to $400 million.</blockquote>
Lets add a little more context to these cuts:

According to this CTnewsJunkie article,  State Gives Loan, Tax Credits To Hedge Fund, Malloy gave $115 Million to a hedge fund to help it to move from Westport to his pet project in Stamford, Harbor Point.

“The hedge fund manages $130 billion in assets, has 1,225 employees, and will be receiving a $25 million forgivable loan and up to $80 million in urban renewal credits from the state for building a new corporate headquarters and creating 1,000 jobs within 10 years.”

More context: Bridgewater Associates is the planet’s largest hedge fund. (Bloomberg:  [url=“http://www.bloomberg.com/news/2012-08-15/connecticut-aids-bridgewater-hedge-fund-to-build-new-hq.html”]
Connecticut Offers Millions to Aid Bridgewater Expansion[/url])

I hope everybody remembers these pesky little facts the next time Malloy says he doesn’t enjoy making cuts.

Who will be forced to do without so THE LARGEST HEDGE FUND IN THE WORLD could get a handout—to help them move to Mayor Malloy’s fair city?

—perturbed

posted by: perturbed | December 14, 2012  7:24am

perturbed

Let’s try that Bloomberg link again:

[url=“http://www.bloomberg.com/news/2012-08-15/connecticut-aids-bridgewater-hedge-fund-to-build-new-hq.html”]
Connecticut Offers Millions to Aid Bridgewater Expansion[/url]

Malloy deserve an award, alright…

—perturbed

posted by: state_employee | December 14, 2012  8:29am

Malloy shamefully gives millions to well off companies, but is going to move mentally retarded dependent citizens out of their homes “group homes” to save money.  nice

posted by: JAM | December 14, 2012  9:00am

@ Lawrence:
“Oh, Hell, just read a newspaper about all the horrible things that will happen when the state has to cut spending next week.”
Thank you for making my point.

posted by: christopherschaefer | December 14, 2012  9:49am

Perhaps we could assume that the same people who gave Malloy an award “for preparing Connecticut for the implementation of the Affordable Care Act” are the same folks who gave Drone Obama the Nobel Peace Prize.

posted by: perturbed | December 14, 2012  6:30pm

perturbed

Darn, that link won’t stick. Too bad—it’s a great article. One more try:

Connecticut Offers Millions to Aid Bridgewater Expansion

http://www.bloomberg.com/news/2012-08-15/connecticut-aids-bridgewater-hedge-fund-to-build-new-hq.html

Connecticut agreed to give Bridgewater a $25 million “forgivable” 10-year loan at 1 percent interest to help finance two buildings totaling 750,000 square feet (69,700 square meters). It will also provide as much as $5 million for job training, $5 million for alternative-energy systems and $80 million in tax credits, according to the statement.

“This is stealing from the poor and middle class to make a billionaire even richer,” Jonathan Pelto, a former deputy majority leader in Connecticut’s House of Representatives, said by e-mail. “This isn’t economic development.”

But wait, there’s more!

This hedge fund oversees $130,000,000,000—yes, that’s $130 Billion. Do you have any idea what kind of profit that generates a hedge fund? The industry standard is to charge “two-and-twenty.” That translates into a minimum of 2% of all assets under management, regardless of whether the fund earns a positive return or loses money. If the fund is able to earn a positive return, the hedge fund scrapes off another 20% of that positive return! [As an example, say the fund has a great year, and earns a 15% return. The hedge fund gets 2%+(0.2)(15%)=5%. If the fund loses 15%, they still get to take 2% for their efforts.]

So, what’s the absolute minimum this hedge fund will earn? Two percent of $130 Billion is $2.6 Billion.

What’s more, the fund managers enjoy a phenomenal tax break—the vast majority of their income is “carried interest.” Carried interest is currently taxed at a maximum rate equal to the capital gains tax rate: 15%. Imagine earning $3.9 Billion in income, as the company founder did in 2011, and paying only 15% income tax on the majority of it!

These are the people Malloy found in need of a helping hand.

Think this rant is unrelated to the cuts Malloy will now impose on the less fortunate? Think again.

(Don’t even get me started on all the special state funding help the larger redevelopment effort—Harbor Point—is enjoying. Coincidence that Stamford is the governor’s home town? Expect to see more state bonds being approved for infrastructure improvements down there…)

—perturbed

posted by: RJEastHartford | December 15, 2012  12:16pm

Clearly, private money is pulling the strings in corporate america and all levels of government. Exam just how private equity funds make money for their investors. John Boggle of Vanguard fame reveals that today, mutual funds for the small investor are essentially a scam. Courant headlines include ‘Earnings Rise’ yet like many other companies in the area (Aetna, The Hartford) people are shown the door, private money determines expenses/liabilities must be cut for the sake of shareholder value. (My 401k does not experience such gains from these same sectors!) Private money advocates government must be cut, yet cut benefits and retirement security as an expense and long term liability in these companies. Where do those effected by the ruse of “shareholder value” go for help?  Probably the government.  Workers from all sectors, especially middle class workers, must join together. Many of these same corporations and majority shareholders (private equity funds) are receiving tax subsidies, some of which are outlined in other posts while participating in major, borderline criminal tax avoidance as a business strategy. This is not the Reagan 80"s any longer, it is a new and very unhealthy dynamic.