Law­mak­ers tell La­mont to fill holes in bud­get

The News-Times - - FRONT PAGE - By Keith M. Pha­neuf

With just over a week left to pro­pose their own state bud­get, leg­is­la­tors still are wait­ing for Gov. Ned La­mont to fill in some fairly pricey line items in his own plan.

Between an ex­pir­ing tax on hospi­tals, a high-stakes dis­pute over Med­i­caid rates, and on­go­ing ne­go­ti­a­tions with state em­ployee unions, there are un­knowns worth hun­dreds of mil­lions of dol­lars that law­mak­ers are strug­gling to work around.

“There are so many mov­ing parts that we are still try­ing to ad­dress,” said Rep. Toni E. Walker, DNew Haven, long­time cochair­woman of the Ap­pro­pri­a­tions Com­mit­tee.

“I think there is still con­sid­er­able uncer­tainty on the com­mit­tee, es­pe­cially about the fu­ture of the hos­pi­tal tax,” said Rep. Jason Rojas, co-chair­man of the Fi­nance, Rev­enue and Bond­ing Com­mit­tee.

Walker’s panel has un­til May 3 to de­velop a new spend­ing plan for the next two fis­cal years. Rojas’

“There are so many mov­ing parts that we are still try­ing to ad­dress.” Rep. Toni E. Walker, D-New Haven, long­time co-chair­woman of the Ap­pro­pri­a­tions Com­mit­tee.

com­mit­tee has un­til May 2 to de­velop a rev­enue sched­ule for the up­com­ing bi­en­nium.

Democrats hold ma­jori­ties in the House and Se­nate — as well as on the bud­get-writ­ing com­mit­tees — but they aren’t the only ones look­ing for in­for­ma­tion from the new gover­nor.

“Now is an important time for you as gover­nor to set the tone for our state, to of­fer a bal­anced and gim­mick-free bud­get pro­posal,

and to be hon­est about your ne­go­ti­a­tions to achieve sav­ings,” Se­nate Mi­nor­ity Leader Len Fasano, RNorth Haven, wrote in a let­ter to La­mont late Tues­day af­ter­noon. And un­less cer­tain de­tails are filled in, Fasano added, “your bud­get still does not bal­ance.”

Striv­ing for a new re­la­tion­ship with hospi­tals

One goal La­mont set early in his ad­min­is­tra­tion was to end the con­tentious re­la­tion­ship that de­vel­oped between his pre­de­ces­sor, Gov. Dan­nel P. Mal­loy, and the state’s hospi­tals.

That dis­pute was cen­tered on a provider tax which be­gan only as a tool to draw more fed­eral dol­lars into Con­necti­cut — but ul­ti­mately be­came a huge source of fric­tion as hospi­tals lost hun­dreds of mil­lions of dol­lars an­nu­ally.

That fric­tion led in 2015 to an in­dus­try law­suit — which is still pend­ing — that ar­gues Con­necti­cut’s bud­getary poli­cies vi­o­lated fed­eral Med­i­caid rules.

Ten­sions rose to new heights dur­ing Mal­loy’s fi­nal months in of­fice last fall when hos­pi­tal of­fi­cials said a new state rate cal­cu­la­tion method led it to short­change hospi­tals $230 mil­lion for treat­ing Med­i­caid patients.

La­mont — who in­her­ited a pro­jected bud­get deficit of nearly $3.7 bil­lion over the next two years — then pro­posed can­cel­ing a planned tax cut worth al­most $190 mil­lion per year to hospi­tals and re­plac­ing it with a $43 mil­lion an­nual in­crease.

La­mont’s fel­low Democrats in the Leg­is­la­ture, ac­knowl­edg­ing the deficit, said it would he eas­ier to sup­port the gover­nor’s plan if he could re­solve the out­stand­ing law­suit and Med­i­caid rate dis­pute.

“The La­mont ad­min­is­tra­tion is tak­ing this as an op­por­tu­nity to kick off a fresh start,” Melissa McCaw, La­mont’s bud­get di­rec­tor, told leg­is­la­tors dur­ing a Fe­bru­ary con­fir­ma­tion hear­ing. “It is not the in­tent of this ad­min­is­tra­tion to con­tinue along that path.”

A spokesman for the gover­nor’s bud­get of­fice said Tues­day only that the ad­min­is­tra­tion re­mains in talks and is con­tin­u­ing to pro­vide leg­isla­tive lead­ers with reg­u­lar up­dates.

Jen­nifer Jack­son, CEO of the Con­necti­cut Hos­pi­tal As­so­ci­a­tion, said that the tax relief adopted two years ago and due in July re­mains very important to the in­dus­try, but also con­firmed that ne­go­ti­a­tions with the La­mont ad­min­is­tra­tion are con­tin­u­ing.

“We stand by the agree­ment we reached in 2017 and are op­posed to the gover­nor’s bud­get pro­posal, which in­creases the tax on hospi­tals,” Jack­son said. “While we op­pose the pro­posed bud­get, we are pleased that the ad­min­is­tra­tion is par­tic­i­pat­ing with us in bud­get and set­tle­ment dis­cus­sions.

But both Walker and Rojas asked what their com­mit­tees should do in the mean­time.

Does the fi­nance panel back a tax hike that rankand-file law­mak­ers may op­pose if the re­la­tion­ship with hospi­tals can’t be re­paired?

What level of Med­i­caid fund­ing does the Ap­pro­pri­a­tions Com­mit­tee rec­om­mend for the next two years, and how might a set­tle­ment of the dis­puted charges from 2018 be paid?

More de­tails needed on la­bor sav­ings

These aren’t the only ques­tions leg­is­la­tors need an­swered now, Fasano said.

La­mont’s bud­get counts on sav­ing $50 mil­lion next fis­cal year and $135 mil­lion in 2020-21 by mak­ing changes to state em­ployee health care plans. Those are sub­ject to on­go­ing ne­go­ti­a­tions with unions.

“We have not received an update from you re­gard­ing your progress in se­cur­ing these sav­ings through ne­go­ti­a­tions,” Fasano said.

Leg­is­la­tors did get an update in­volv­ing another cost-sav­ings ini­tia­tive — but it wasn’t the kind they wanted.

La­mont told Capi­tol reporters two weeks ago that he won’t se­cure one con­ces­sion he re­quested from unions — new lim­its on cost-of-liv­ing ad­just­ments to pensions.

The gover­nor said he still hopes to se­cure this give­back at some point, but added it’s un­likely to hap­pen be­fore leg­is­la­tors adopt the next, two-year state bud­get.

La­mont’s bud­get pro­posal counted on these COLA changes to stay in bal­ance, as­sum­ing $26 mil­lion in sav­ings next fis­cal year and $28.6 mil­lion in 2020-21.

Per­haps the biggest ques­tion mark in­volv­ing la­bor costs in­volves the gover­nor’s pro­posal to re­fi­nance con­tri­bu­tions owed to pensions for state em­ploy­ees and mu­nic­i­pal teach­ers.

La­mont wants to scale back con­tri­bu­tions owed between now and 2032, and then have a fu­ture gen­er­a­tion of tax­pay­ers cover those pay­ments — plus the in­vest­ment earn­ings the state would for­feit by not mak­ing the con­tri­bu­tions on the orig­i­nal sched­ule.

This pro­posed de­fer­ral has sparked con­cern among leg­is­la­tors from both parties, who note it would smooth spik­ing pay­ments — but do so by adding bil­lions of dol­lars in costs to pen­sion sys­tems that al­ready suf­fer from decades of in­ad­e­quate fund­ing.

La­mont’s bud­get as­sumes al­most $640 mil­lion in re­duced pen­sion costs across the next two fis­cal years com­bined.

La­mont’s bud­get counts on sav­ing $50 mil­lion next fis­cal year and $135 mil­lion in 2020-21 by mak­ing changes to state em­ployee health care plans. Those are sub­ject to on­go­ing ne­go­ti­a­tions with unions.

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