Democratic Gov. Dannel P. Malloy said he would listen to his Democratic colleagues in the legislature, who are coming up with a list of alternative emergency budget cuts, but that’s where he stopped Tuesday.
House Speaker Brendan Sharkey told Senate Republican Leader Len Fasano in a letter that Democrats planned to present Malloy with a set of alternative spending cuts in lieu of some of the $103 million in emergency budget cuts his office announced last week.
Fasano told Sharkey Tuesday that anything short of a special session would be pointless. Fasano reminded the speaker that the Democrat-controlled legislature has been happy, in the past, to return for special session to pass its own budget when there was a Republican governor.
“I fail to see a principled reason to handle this situation any differently given the widespread concern among rank-and-file legislators regarding the devastating impact of the governor’s cuts to Medicaid recipients, hospitals, the disabled, and other vulnerable citizens,” Fasano wrote. “By allowing these cuts to go unchallenged, you are abdicating your leadership role and conceding all budget decisions to the governor.”
Democratic and Republican lawmakers have expressed concern about the cut to hospital funding. The Malloy administration cut $63.4 million in Medicaid funding to hospitals, which is about 40 percent of the funding the 29 acute care hospitals receive from the state. It amounts to about $192 million in cuts because the state receives a federal matching grant for the amount of money it spends.
“I take serious recommendations from serious people all the time,” Malloy said Tuesday following the state Bond Commission meeting.
Even though Malloy has the authority to unilaterally make the cuts, he said he had a meeting with Democratic legislative leaders before they were announced.
Malloy has the power to rescind up to 5 percent of any line item and 3 percent of any fund without seeking legislative approval.
“I told them up front that it would involve the things that it involves,” Malloy said Tuesday.
However, Gabe Rosenberg, a spokesman for Sharkey, said the governor never said anything about cutting Medicaid to hospitals during their meeting. He said the governor only referenced the potential $20 million reduction in municipal aid.
Devon Puglia, Malloy’s spokesman, said Sharkey was made aware of the hospital cuts on Aug. 26, almost three weeks before the rescissions were announced.
“The governor made clear to leaders directly the proactive steps we took to balance the budget on August 26, including hospitals,” Puglia said Tuesday.
Malloy reiterated to reporters Tuesday that he takes “serious thoughts from serious people all the time.”
What’s not serious, according to Malloy, is the Republican proposal earlier this year to restore all of his budget cuts and ask him to find $600 million in savings elsewhere. He said that encouraged Democratic lawmakers to restore some of the cuts Malloy proposed and caused them to end up with a budget that no one liked.
“Simply saying the governor should find $600 million in savings elsewhere is not a serious idea,” Malloy said.
As far as the hospital cuts are concerned, Malloy said he thinks the public should know that nonprofit hospitals made about $916 million in profit last year. He said there are only three hospitals that didn’t end the year in the black.
Pat Charmel, president and CEO of Griffin Hospital, said the effective tax rate hospitals are paying to the state “is four to five times what for-profit corporations are paying” at a time when “our industry is going through a radical transformation.”
The hospital tax is $500 million higher today than when it was first implemented in 2011.
“You can’t be serious in the state of Connecticut about cutting expenditures if you’re not willing to put everything on the table,” Malloy said. “That’s a serious conversation, involving serious people.”
He said if there’s an expectation that hospitals don’t have to participate in helping the state save money, then it’s an argument that “simply doesn’t make sense.”
He said when state employees get a 3 percent raise newspapers editorialize about it, but when a nonprofit organization is paying their chief executive $3 million and growing their profits and then pointing a finger at the state — “I don’t think there is anything such as a red herring.”
He said when state employees get a 3 percent raise newspapers editorialize about it, but when a nonprofit organization is paying their chief executive $3 million and growing their profits and then pointing a finger at the state . . . “I don’t think there is anything such as a red herring,” Malloy said.
He said all the information should be on the table and the citizens of the state of Connecticut can make their own judgment.
Jennifer Jackson, CEO of the Connecticut Hospital Association, has said executives at hospitals should be well compensated and the discussion about compensation is a “distraction” from the real issue of hospital cuts.
“We need to be able to attract and retain the most capable and brightest executives,” Jackson said, adding that the argument about executive compensation is not significant to the conversation. She said the state gives tax breaks to for-profit companies with CEOs who make “multiples” of what hospital CEOs make.
“The conversation is about how do we take care of the people in the state of Connecticut and how do we improve our state’s economy,” Jackson said.
Michele Sharp, a spokeswoman for the Connecticut Hospital Association, objected to the Malloy’s administration position that hospitals should be treated differently than private companies that receive grants from the state.
“Not only does the state not subsidize hospitals, it pays virtually nothing of its responsibility to those most in need and on Medicaid,” Sharp said. “This leaves our state’s neediest with less access to care and makes healthcare more expensive for everyone else. The state taxes hospitals more than half a billion dollars a year – resulting in an effective statewide tax rate of 85 percent. Then, the governor demonizes hospitals for making a profit, which hospitals need to invest in healthcare.”
