By Ken Dixon, Connecticut Post

Photo: Brian A. Pounds / Brian A. Pounds

Joseph F. Brennan, president and CEO of the Connecticut Business and Industry Association

Joseph F. Brennan, president and CEO of the Connecticut Business and Industry Association

State Sen. L. Scott Frantz, R-Greenwich, opposes a proposed local option real estate tax on hospitals.

State Sen. L. Scott Frantz, R-Greenwich, opposes a proposed local option real estate tax on hospitals.

State Rep. Cristin McCarthy Vahey, D-Fairfield, opposes Gov. Malloys proposed shift of state aid away from wealthier towns like hers, to troubled inner cities.

State Rep. Cristin McCarthy Vahey, D-Fairfield, opposes Gov. Malloys proposed shift of state aid away from wealthier towns like hers, to troubled inner cities.

Stamford Hospital would pay about $8.3 million a year in local real estate taxes under a proposal by Gov. Malloy.

Stamford Hospital would pay about $8.3 million a year in local real estate taxes under a proposal by Gov. Malloy.

Stamford Hospital

Stamford Hospital

The town of New Milford would collect about $757,000 a year from New Milford Hospital, under a budget proposal by Gov. Dannel P. Malloy.

The town of New Milford would collect about $757,000 a year from New Milford Hospital, under a budget proposal by Gov. Dannel P. Malloy.

Danbury Hospital would pay $7.2 million a year in local real estate taxes under a budget proposal pending in the state Capitol.

Danbury Hospital would pay $7.2 million a year in local real estate taxes under a budget proposal pending in the state Capitol.

Griffin Hospital would pay the city of Derby about $2.9 million a year in local real estate taxes under a proposal by the governor.

Griffin Hospital would pay the city of Derby about $2.9 million a year in local real estate taxes under a proposal by the governor.

Bridgeport Hospital. Under a plan by Gov. Malloy, Bridgeport would collect about $20 million a year in local real estate taxes for hosting Bridgeport Hospital and St. Vincents Medical Center.

Bridgeport Hospital. Under a plan by Gov. Malloy, Bridgeport would collect about $20 million a year in local real estate taxes for hosting Bridgeport Hospital and St. Vincents Medical Center.

Exterior of St. Vincent's Medical Center, in Bridgeport, Conn. Dec. 12, 2016.

Exterior of St. Vincent's Medical Center, in Bridgeport, Conn. Dec. 12, 2016.

Business divided on Malloy budget

The business community is divided over Gov. Dannel P. Malloys proposed two-year, $40.5 billion budget proposal, with Connecticut hospitals opposed to a plan that would end their freedom from local real estate taxes.

But the states largest business organization says that Malloys attempt to create regional relief for troubled inner-city schools could mean greater economic growth in the long run.

Joe Brennan, president and CEO of the Connecticut Business & Industry Association, said that given the projected $1.7 billion deficit for the fiscal year starting July 1, corporate leaders had been concerned that Malloys budget plan might include higher taxes.

We understand there are some tax increases in the budget, but were not seeing this huge, broad-based tax increase that weve seen in the past, which the governor has said ... was not his desire, Brennan said. I think its a good thing that hes begun, maybe, a new dialogue with municipalities on how were going to fund both state and local obligations going forward.

Taxes on the way?

Gov. Dannel P. Malloy has proposed that towns and cities levy local real estate taxes on hospitals. This is that could mean in extra municipal revenue:

Greenwich: $2.87 million per year

Stamford: $8.3 million per year

Norwalk: $9.9 million per year

Danbury: $7.2 million per year

Bridgeport: $20 million per year

Derby: $2.9 million per year

Milford: $1.47 million per year

New Milford: $757,000 per year

For the first time, under Malloys plan, hospitals would lose their exemption from local real estate taxes, which for cities such as Bridgeport home of St. Vincents Medical Center and Bridgeport Hospital could result in added tax revenue of $20 million annually.

Jennifer Jackson, CEO of the 98-year-old Connecticut Hospital Association, called Malloys plan a direct attack on the fabric of our communities. She warned of previous plans that have resulted in more than $2 billion in taxes and cuts to local hospitals.

The hospital tax has increased costs for patients, caused the loss of thousands of health care jobs, extended wait times and reduced access to care for those who need it most, Jackson said in a statement.

State Sen. L. Scott Frantz, R-Greenwich, supported Jackson. The question is, how much more money is the state going to try to extricate from our hospitals? Frantz said in a statement. This is nothing but a shell game.

Malloys budget staff estimates that if cities that support hospitals tax their real estate, hospitals would be exposed for about $212 million. The governor has budgeted $250 million, including federal Medicare support, to reimburse hospitals for their losses.

Overall, we are pleased with the net-positive budget number for Bridgeport and we deeply appreciate the governors commitment to Connecticuts cities as hubs of regional growth, said Av Harris, director of legislative affairs and public policy for Bridgeport Mayor Joe Ganim. We know this is not an easy budget, and there are many who are disappointed.

Second-term state Rep. Cristin McCarthy Vahey, D-Fairfield, said Thursday that she is concerned about net cuts totaling more than $7.6 million that Malloy plans for her town.

This would create a tremendous strain on Fairfields budget, Vahey said in a statement. Simply shifting such a large share of the cost burden to municipalities is not a comprehensive solution to our budget challenges.

Malloys budget includes $1.36 billion in spending reductions and $205 million in new taxes, including higher tobacco taxes to add $60 million in revenue, and the elimination of the $200 property tax exemption to bring in $105 million annually. The governors proposal would also reduce taxes on the insurance industry, lowering the rate that premium are taxed from the current 1.75 percent, to 1.5 percent.

While officially presented on Wednesday, the budget will reach the legislative process on Friday morning when Ben Barnes, Malloys budget director, presents it to the legislative Appropriations Committee for questions. Public hearings will follow as the General Assembly heads toward its statutory deadline of 12:01 a.m. on June 8.

kdixon@ctpost.com; Twitter: @KenDixonCT

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Business divided on Malloy budget - CT Post