Clock Is Ticking On Hospital Tax
HARTFORD, CT — The halls of the state Capitol were quiet Friday as Democratic Gov. Dannel P. Malloy’s administration worked to resolve its longstanding dispute with the Connecticut Hospital Association.
Plans for the General Assembly to convene a special session Friday for a vote on a proposal to leverage more federal reimbursements for hospitals were scrapped as the Malloy administration continued negotiating the 2016 complaint.
The Malloy administration and the Connecticut Hospital Association were negotiating most of Thursday afternoon, but will not meet again until next week.
Malloy has said he wants to resolve the lawsuit the association and 20 hospitals filed against the state in 2016 before moving forward with a new taxing scheme to leverage $365.5 million in new federal funds each year. The hospitals originally asked the court to end the tax and find that the state overreached in its implementation.
The hospital industry pays $439 million more in annual taxes than it gets back from the state. The deal, which was included in both budget proposals, would reduce the annual burden on the hospitals to $209 million a year.
Connecticut Hospital Association CEO Jennifer Jackson said it would be best to enact the deal as soon as possible to maximize federal dollars. At the same time “we also remain committed to working toward a separate long-term global agreement with the administration,” Jackson added.
Malloy has not been willing at this point to put leveraging federal dollars and the lawsuit on separate tracks.
The tax deal, which raises the tax on hospitals by $344 million per year, would have to be completed by Oct. 15 in order to access the additional federal funds. As part of the deal, the state has agreed to redistribute the $344 million to the hospitals, in addition to $326 million.
A pre-trial conference in the lawsuit has been scheduled for 11:30 a.m., Oct. 19.
If the administration doesn’t succeed in these negotiations, it puts a sizeable hole in the state budget and adds to the deficit lawmakers and the governor have been unable to resolve.
House Speaker Joe Aresimowicz, D-Berlin, said he wants to give the administration time to have the conversations they need to have with the hospitals.
“We’d like to resolve all claims,” Aresimowicz said. “We hope that’s possible sooner rather than later.”
Senate Republican President Len Fasano, R-North Haven, said he thinks they should vote on the hospital tax separately, but he has no power to call the legislature into session. That power resides with Senate President Martin Looney, D-New Haven, and Aresimowicz.
Looney said Malloy expressed to legislative leaders that Oct. 15 was a target date to complete the hospital negotiations because that’s when the opportunity for greater federal reimbursement slips away.
Looney said it would be premature to act while negotiations are ongoing.