Hartford’s three acute-care hospitals would pay approximately $56 million a year to the city, if state lawmakers approved a plan allowing local governments to levy a property tax on nonprofit healthcare providers.
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Hartford's three acute-care hospitals would pay approximately $56 million a year to the city, if state lawmakers approved a plan allowing local governments to levy a property tax on nonprofit healthcare providers.
Hartford Hospital, which owns more than two dozen tax-exempt properties in the city, would face the largest tax bill of about $33.8 million, according to estimates provided by the Office of Policy and Management (OPM). St. Francis Hospital and Medical Center and its sister Mount Sinai Rehabilitation Hospital would see a combined $30 million tax bill.
Meanwhile, Connecticut Children's Medical Center would have to pay $2.5 million, OPM said.
The proposed local-option property tax — part of Gov. Dannel P. Malloy's budget plan — aims to help cash-strapped cities like Hartford, which is facing tough financial headwinds and is home to a significant number of tax-exempt properties.
If all cities and towns chose to implement the tax, it would raise an estimated $212 million a year in new local tax revenues, according to OPM Secretary Benjamin Barnes.
Combined with other proposals in Malloy's budget, Hartford Mayor Luke Bronin estimates that the city would net approximately $40 million in additional revenue, which would cover nearly 80 percent of the city's projected $50 million deficit for fiscal year 2018. Several parts of Malloy's spending plan would cost the city money, including a provision requiring Hartford to cover more of its teacher pensions, but overall the city would receive more funding through higher education aid and potential hospital-tax revenue.
Hartford contains nearly 60 tax-exempt properties owned by hospitals or affiliated entities with a combined assessed value of more than $768 million, according to property records from the city assessor's office.
The property tax proposal, however, faces fierce resistance from hospitals, with the Connecticut Hospital Association going so far to call it “a direct attack on the fabric of our communities” and promising its members would “vigorously fight” the measure.
The opposition comes despite a pledge from Malloy to reimburse hospitals with supplemental Medicaid funds to fully offset the local taxes they would pay.
Hospitals say they don't trust that the state would keep its reimbursement promise.
The reimbursements would be similar to payments hospitals have received from the state to help offset a hospital tax the legislature implemented in 2011, which allows the state to bring in matching dollars from the federal government. Originally, the state used those matching funds to fully reimburse hospitals, but lawmakers have kept more of that money in recent years to balance the budget.
As of fiscal year 2016, hospitals paid nearly $400 million more in the hospital tax than they received back, according to Feb. 2016 estimates from the Office of Legislative Research.
Barnes recently said he understands why hospitals might be distrustful of the state, given past reductions in payments. He said he's also aware of concerns about potential federal Medicaid cuts that could affect the amount of money the state receives.
To ease hospitals' concerns, Barnes said he would be in favor of some kind of “statutory or other assurances” requiring the state to keep its reimbursement promise this time.
Connecticut Children's, which is exempt from the provider tax but is counted under OPM's property tax estimates, said it is concerned about the proposed tax, particularly as it “faces growing uncertainties around the future of Medicaid.”
“We have grave concerns about the precedent set by further eroding the tax-exempt status of nonprofit hospitals,” Connecticut Children's said in a statement.
Meanwhile, Hartford HealthCare CEO Elliot Joseph said in a statement that the tax would increase healthcare costs.
“Twice before, the state has promised us adequate funding for Medicaid services through the federal hospital tax program,” Joseph said. “Both times, that promise was broken.”
St. Francis Hospital deferred comment to the Hospital Association.
