HARTFORD, CT — Outgoing Office of Policy and Management Secretary Ben Barnes believes two powerful groups — hospitals and municipalities — are the biggest obstacles to Connecticut’s fiscal stability.
Barnes made that statement during a far-ranging discussion Thursday at the Connecticut Voices for Children 18th Annual State Budget Forum.
“It’s the kind of thing you can say when you are two weeks away from the end of service.”
Acute care hospitals, Barnes said, “have used their virtuous status to somehow strengthen their demand for resources that the state cannot afford.”
He said hospitals are a “group that gets what they want virtually all the time.” He said they are the only group he knows of that is able to dedicate all the taxes they pay “right back to their own bottom line.”
He said if the state loses the lawsuit filed against it by most of Connecticut’s hospitals, it will cost the state $4 billion. The lawsuit, which was filed in 2016, challenges the taxing structure the state created for the hospitals. It’s still making its way through the court system and no decisions have been made.
As far as municipalities are concerned, Barnes was just as direct, stating legislators need a change of attitude.
Barnes, who once worked for the Connecticut Conference of Municipalities, the city of Stamford, and the schools in Bridgeport, said he knows that won’t be easy — “I used to work in local government.” But he said until legislators look at the bigger picture of the entire state and not just their own town, Connecticut will have budget problems.
Right now, Barnes said, “no town can ever get less than what they got the year before.”
“We are spending a lot of money on communities that have plenty of money,” he went on.
He cited the Teachers Retirement System as the best example of a system that needs to be fixed.
Currently, the state funds the teacher retirement program. Attempts by the Malloy administration to have the towns pick up some of that cost was met with a huge backlash.
The annual contribution to the Teachers’ Retirement System is about $1.3 billion, but could top $3.25 billion to $6.2 billion by 2032, depending on various experts, because of years of underfunding. Connecticut didn’t start setting aside money to pay for teachers’ retirements until around 1982.
Barnes said the state, sooner or later, has to deal more directly with the fact that more affluent communities such as Greenwich, Weston, and Westport need less state funding than poorer communities such as Hartford, New Haven, and Bridgeport.
“We tried to re-stack the deck to put more resources into neediest communities but it was dead on arrival,” Barnes said. “My parting hope is that majority of legislators will look at this issue again. There is enough money but we are currently spending it on people who don’t need it as much.”
In answer to a question from the audience about the issue of how municipalities could find savings, Barnes said the state needs to get serious about regionalization.
He said the legislature should “compel mergers” perhaps offering incentives to do so. He called that the “kind of big idea” that Connecticut needs to be thinking about, having municipalities with hundreds of thousands instead of a few thousand people with regional police, health, and school districts.
Barnes also talked at length about the issue of state pensions. He said he felt that state workers were unfairly “scapegoated” for the problem.
He said while there are some examples of very high pensions being paid to state employees, the average state pension is about $38,000.
“Local government pensions are way better,” the OPM secretary said. He said those who work in the private sector also retire with much better pensions than the average state worker.
Besides, Barnes said, there is a moral obligation involved.
“The law of the land is that when somebody retires with a pension they have a right to that pension,” Barnes said. “We can’t renege on our deal to employees.”
He said even if there was a legal way found to tear up state pension agreements, “Why on earth would we want to do that? These are folks who are cleaning up after our elderly parents or our grandparents. The idea that we would walk away from that is reprehensible.”
Barnes said while he believes that the budget will be in good hands with Lamont in charge and the newly-elected legislature, he also said he’s worried that the 2019 budget was built with what he termed “one-time sweeps” that will create a $630 million hole that will need to be filled in next year’s budget.
“It’s going to create a huge problem for 2020,” Barnes said.
Barnes did say there was some good news, too.
He said the state has seen a 10 percent increase in the withholding portion of the income tax over the past few months — much higher than has been budgeted.
The state is on track “to see some of the most robust growth” in revenue than it’s seen in the past decade, he said.
Accomplishments over the past eight years that he is particularly proud of include Medicaid and criminal justice reform.
“Crime is down, prison population is down,” Barnes said. He added that the state has also made strides in having greater civil rights and eliminating the death penalty.
Connecticut has also had the best results in the nation when it comes to controlling the per member, per month costs of Medicaid recipients.
“We are a national model,” Barnes said.
He referred to Connecticut as a place “I’m proud to call home.”
Barnes recently landed a new job as chief financial officer for the Connecticut State Colleges and Universities.