On Sept. 18, Gov. Dannel P. Malloy ordered $103 million in cuts to the state budget, which had taken effect just three months previously. As reasons, the administration cited downward revisions in projected revenues due to unexpectedly low tax receipts and stock market weakness. In other circumstances, the rescission order might look like reassuring fiscal prudence. Instead, it looks more like 11th-hour backpedaling on a budget that was unworkable to begin with, and it has caused genuine alarm.
Two-thirds of the cuts, or $64 million, are reductions in Medicaid spending that directly affect hospitals. Their impact is much greater, however, because the reductions mean a loss of $128 million in federal dollars. The result is a total loss of $192 million in funding for Connecticut’s hospitals. The Western Connecticut Health Network, which includes Norwalk, Danbury and New Milford Hospitals, will take a $14 million hit, of which $6.3 million falls on Norwalk Hospital alone.
These cuts are actually greater than those proposed last February by the governor and then adamantly rejected by legislators of both parties. They come while hospitals are already coping with a tax imposed four years ago as part of a scheme to bring more federal Medicaid funding to the state. Although they were supposed to receive a net gain from the arrangement, hospitals have seen their taxes grow exponentially. This month’s cuts also come at a time when hospitals already have their budgets set, making strategic planning almost impossible.
This is far from just a financial issue because Medicaid cuts affect the state’s most vulnerable populations directly. That’s a lot of people: one of five in Connecticut are on Medicaid, and of those, 25% are children. The Connecticut Hospital Association has said that the new Medicaid cuts will lead to staff reductions, longer wait times for patients and an inability to invest in the low-cost preventive services Medicaid patients need to stay healthy. According to John Murphy, CEO of WCHN, the worst consequence is that people who can’t afford basic health care won’t seek it and will “carry their burdens quietly” as their health deteriorates. This isn’t a scenario that anyone wants.
While the recent rescissions hit hospitals the hardest, they also substantially cut funding for services to the intellectually disabled, to the mentally ill, substance abuse programs and education.
Something is very wrong with this picture. Why are critical services for our most vulnerable residents being cut while state employees are receiving $350 million in raises and fringe benefits that outstrip any available in the private sector? Why, after the two largest tax increases in the state’s history, are residents paying so much more while government services are getting worse? Why is there a willingness only now to acknowledge that a projected 7.1% increase in personal income taxrevenues was an unrealistic and shaky foundation for the current budget – especially when Connecticut relies so heavily on volatile investment income?
That these questions persist makes it clear that the state budget is plagued by serious issues with spending priorities,sustainability and fiscal responsibility. Introducing widespread cuts on an ad hoc basis every few months, as the administration has done recently, not only hurts residents, but also doesn’t address the budget’s structural problems. In fact, if nothing fundamental changes, the state will show a deficit of more than $1 billion in fiscal 2018, the first year following the current budget cycle.
The situation is serious, but it can be reversed if the will is there. I have joined House and Senate Republican colleagues in calling for a special session to put everything on the table – particularly the state’s labor costs, which represent 35% of the budget – to restore the funding that was cut and to initiate long-term budget reforms with all due urgency.
There’s also a more direct alternative. The authority to negotiate the state’s labor agreements lies with the executive branch. House Minority Leader Themis Klarides has asked Gov. Malloy to discuss concessions with the state employee unions, and nothing could be more timely. This would be the most direct route toward both establishing a sound, long-term fiscal foundation for Connecticut and ensuring that critical services are preserved.
State Rep. Gail Lavielle, a Republican, represents Norwalk, Westport and Wilton. She is a member of the General Assembly’s Appropriations Committee.