Connecticut’s Unpaid Tax Bill Surges to $127M Amid Forgiveness Talks

UPDATE: Connecticut’s unpaid hospital provider tax bill has skyrocketed to over $127 million, and state officials are now discussing potential debt forgiveness as part of a critical acquisition deal for Waterbury Hospital. This urgent financial crisis stems from a bankruptcy filing by Prospect Medical Holdings, which has not met its tax obligations since 2022.

Documents obtained by The Connecticut Mirror reveal that the California-based hospital chain owes substantial amounts for multiple facilities: $64.4 million for Waterbury Hospital, $47.2 million for Manchester Hospital, and $16.2 million for Rockville General Hospital. The state is currently negotiating a tax settlement to facilitate UConn Health’s acquisition of Waterbury Hospital amidst rising concerns for local healthcare stability.

The Connecticut Department of Revenue Services initially reported $67 million in tax liens earlier this year, but that figure has more than doubled, emphasizing the growing financial burden on the state. As of now, the total tax obligation is projected through the end of 2024, with no calculations available for 2025 taxes, suggesting the bill could swell even further.

State Comptroller Sean Scanlon confirmed that negotiations are ongoing regarding the amount of debt the state may forgive. “If we want to support UConn Health’s taking over the hospital, then we will have to forgive the tax debt if it’s part of the deal,” he stated, highlighting the urgency of the situation.

Gov. Ned Lamont has expressed a shift in perspective regarding taxpayer subsidies for the hospitals, stating, “We really want to keep these hospitals going. I know how important they are to the community.” However, in a notable contrast, he previously rejected a request from Yale for $80 million in state funding to facilitate a different acquisition deal that ultimately fell through.

In addition to Waterbury, the state is also looking to acquire Bristol Hospital and Day Kimball Hospital in Putnam, which are facing similar financial challenges. The plan involves borrowing $390 million to support capital improvements across all three hospitals, demonstrating the increasing pressure on state resources to maintain essential healthcare services.

The hospital provider tax is vital for financing Connecticut’s Medicaid program, allowing the state to receive federal matching funds. Without compliance from hospitals, the state risks losing crucial federal support, further complicating the healthcare landscape.

Just this week, a subsidiary of Hartford HealthCare secured the acquisition of Manchester Memorial and Rockville General Hospitals for $86.1 million in bankruptcy court, indicating a significant shift in ownership within the state’s hospital system.

As discussions continue, the fate of Prospect Medical Holdings and the associated tax forgiveness remains uncertain. The implications of these negotiations could have lasting effects on healthcare availability in Connecticut, making it a critical issue for local communities.

In a rapidly evolving situation, officials urge residents to stay informed as developments unfold. The stakes are high, and the urgency for resolution is paramount.