Sen. Kissel, Sen. Guglielmo Call for Hospital Provider Tax Exemption for Hospitals in Financial Distress

April 9, 2010

Local hospital in bankruptcy expected to pay $2.26 million in new taxes

Hartford, CT- State Senator John A. Kissel (R-Enfield) and State Senator Tony Guglielmo (R-Stafford) are advocating that hospitals in financial distress be exempt from the Hospital Provider tax passed earlier this week by the Finance Revenue and Bonding Committee. Johnson Memorial Hospital in Stafford Springs, one of the areas largest employers, will be expected to pay $2.26 million in new taxes despite being in Chapter 11 bankruptcy. Hospital officials have warned that the tax could drive Johnson Memorial into permanent Chapter 7 bankruptcy leading the facility to close down and nearly 1,200 jobs to be lost.

“When I first learned of the majority’s latest plan to increases taxes rather than cut spending, I felt that it was a step in exactly the wrong direction,” said Sen. Kissel. “However, the fact that this bill will impose a new tax on a hospital that is in the middle of bankruptcy proceedings shows the full extent of the legislature’s inability to make wise choices for the future of our state. This plan is not a step in the wrong direction; it’s a giant leap. I have been in contact with hospital officials and Sen. Guglielmo and I are working on an amendment that will exempt any hospital in financial distress from this tax. I am hopeful that my colleagues in the Senate will look favorably on our amendment and work with us to keep Johnson Memorial from being forced into permanent bankruptcy.”

“There are many problems with the proposed hospital Tax. First it asks patients, people who are ill, to pay more because inevitably the tax is going to be passed on to them. But even more troubling is that the money collected will qualify the state for a federal reimbursement that many smaller suburban hospitals in Connecticut will never get back,” said Sen. Guglielmo. “It is no secret that Johnson Memorial is facing financial problems, for the state to ask the hospital to pay more in taxes while getting nothing in return makes no sense. The hospital tax is nothing more than a money grab that will benefit a few hospitals, hurt even more hospitals, and worst of all tax every patient in the state of Connecticut.”

When SB 478, An Act Concerning Intra-Corporation Payments to Related Entities, is brought to the floor of the Senate for a vote, Sen. Kissel and Sen. Guglielmo plan to propose the amendment to exempt Johnson Memorial Hospital from paying the tax. Currently, Johnson Memorial is the only hospital in the state required to pay the 5.5% tax that will not be appropriated any of the redistributed funds.