As Governor Dannel Malloy moved to cut aid to many municipalities in his latest biennial budget proposal, he did give them one way of making it up. He proposed to end the tax-exempt status of hospitals, meaning that towns could charge them property tax for the first time.
In a statement, the Connecticut Hospitals Association called it "a direct attack on the fabric of our communities."
"Hospitals are an important part of their communities," CEO Jennifer Jackson told WNPR. "They are strong economic drivers -- they are often the largest employer in town. So to further destabilize hospitals is not in the best interests of municipalities."
She said her members are still grappling with a state tax imposed in the previous budget, a move that she claims has cost hospitals three thousand jobs statewide.
"It makes healthcare more expensive, and programs and services have been closed and cut back," said Jackson. "The one thing we really need to bring into this conversation is how we best care for patients."
The Connecticut Business and Industry Association gave a more muted response to the budget. Joe Brennan, CEO of the CBIA, said he recognizes Malloy had few good choices, given the level of deficits he’s facing, and Brennan is pleased he chose to safeguard the state’s larger cities.
“More vibrant urban centers can attract talent and attract capital and help those cities grow,” he said.
But he also sounds a note of caution on cuts to municipal aid, which he says may lead to taxes elsewhere. “The concern among a lot of the small business companies that we represent, is potential impacts on the property tax side," he said. "Because some towns, if they receive less state revenue, it may ultimately lead to increases in property taxes, which is a big issue for a lot of our companies.”
In all, changes to tax credits and exemptions are designed to net the state another $200 million in the first year of this budget.