Connecticut
CT could bond $390 million for UConn Health, Waterbury Hospital
Connecticut plans to borrow $390 million to expand the footprint of its own struggling flagship medical institution, the University of Connecticut Health Center, while simultaneously ridding the state of hospitals under private equity ownership.
According to communications obtained this week by The Connecticut Mirror, the debt would be added to the “UConn 2000” bonding package, the state’s financing program for capital projects at its flagship university.
The $390 million in borrowed funds would cover the $13 million acquisition of Waterbury Hospital from Prospect Medical Holdings, a now-bankrupt hospital operator that was formerly backed by private equity investment. The funding would also pay for “other future clinical partnerships,” according to the communication.
Last month, CT Mirror confirmed that UConn Health is also in talks to purchase Bristol Hospital and Day Kimball Hospital in Putnam. It is not clear from the communications whether any of the additional funding would be used to pay for the acquisition of those two hospitals.
A significant portion of the funding would go toward investments in “IT, equipment, deferred maintenance and working capital,” the communication said. Waterbury Hospital, in particular, would need a major influx of capital funding to upgrade its systems, which are still recovering from a crippling cyberattack in 2023.
Gov. Ned Lamont’s office did not respond to a request for comment, nor did Prospect Medical Holdings.
UConn Health spokesperson Jennifer Walker deferred comment to the governor’s office.
The nearly $400 million proposal does not address the hospital provider taxes Prospect owes the state, or its unpaid municipal taxes in Manchester and Waterbury.
As of last month, the Lamont administration was considering forgiving Prospect’s tax liabilities to the state as part of the deal for UConn Health to acquire Waterbury Hospital, according to several legislators who were briefed on the potential deal.
Prospect and its subsidiaries owe the Connecticut Department of Revenue Services as much as $100 million in “taxes or penalties,” according to court filings. However, state officials declined multiple requests to confirm Prospect’s total tax liability to the state.
The legislature would have to approve both the bonding and the tax forgiveness, House Speaker Matt Ritter, D-Hartford, confirmed. Ritter said the legislature would likely approve waiving Prospect’s tax bill.
“If we want to support UConn Health’s taking over the hospital then we will have to if it’s part of the deal,” Ritter said. “Otherwise you have to consider the alternatives — that the hospital could potentially close or some other private equity firm could come in and buy it.”
State Sen. Saud Anwar, D-South Windsor, a physician at one of Prospect’s Connecticut hospitals and a fervent critic of private equity in health care, said he agreed it would be the right move for the state, even though he doesn’t want to see Prospect “make money off the taxpayers.”
“I do think providing high-quality care to the people of Waterbury and beyond is absolutely essential,” said Anwar, who serves as co-chair of the legislature’s Public Health Committee.
During a meeting in September, members of Gov. Lamont’s administration and leadership from the University of Connecticut presented a plan to legislators regarding UConn Health’s acquisition of Waterbury, Day Kimball and Bristol hospitals. Part of that plan included forgiving Prospect’s outstanding taxes to the state. However, several legislators in attendance said they have not heard an update regarding tax forgiveness since then.
The UConn expansion is part of a broader strategy to make the institution more competitive with other academic medical centers in the market. State officials also hope it will improve the financial stability of the institution, which has generated cash flow losses averaging $140 million per year between 2020 and 2023, according to a report released last year.
Prospect isn’t the only health system with unpaid taxes. Day Kimball owes the state roughly $41 million, according to a Sept. 4 DRS report, which means the state may have to grapple with that debt as well. Bristol Health owes less than $14,000 in taxes, according to the same report.
In reference to the outstanding taxes, Day Kimball CEO Kyle Kramer said the hospital is “working together” with state officials toward “a long-term solution” and has been making payments.
Prospect Medical Holdings filed for bankruptcy protection in January, and the sale of its hospitals around the country is being overseen by the U.S. Bankruptcy Court in Northern Texas.
In September, Hartford HealthCare bid $86.1 million to purchase the other two Prospect-owned hospitals in Connecticut — Manchester Memorial and Rockville General. Additional bidders may submit offers through Oct. 16. A sale hearing, where the bankruptcy court judge will approve the preferred offer, is scheduled for Oct. 24.
Yale New Haven Health was originally slated to purchase all three facilities in a $435 million deal reached in 2022. But the transaction became mired in legal disputes, with both health systems suing each other over the true value of the hospitals. The parties recently settled, with Yale New Haven agreeing to pay Prospect $45 million to exit the deal and end all pending litigation.
On Oct. 3, the University of Connecticut’s Board of Trustees and the UConn Health Board of Directors voted to approve a $13 million bid to acquire Waterbury Hospital. In a statement the same day, UConn Health CEO Andrew Agwunobi said UConn Health would submit the bid “in the coming week.” However, the health system had not submitted an offer as of Oct. 14.
Republicans have staunchly defended unprecedented state efforts in recent years to shrink Connecticut’s massive legacy of pension debt, even though it’s leached billions from education, health care and other core programs in the process.
But the GOP has begun to modify that stance, willing to scale back that effort if — and only if — those dollars go back to middle-class households in the form of big tax cuts.
Citing high energy costs, inflation above federal targets and Congress cutting deeply into human services, Republicans say Connecticut families need more help badly now, but not through new state programs.
And with many Democrats already renewing their push for a new child-based income tax cut and the next state election less than 12 months away, the 2026 General Assembly session could be swamped with tax-cutting ideas.
GOP: CT households must benefit directly from big surpluses
“For my constituents, it’s about over-taxation,” House Minority Leader Vincent J. Candelora, R-North Branford, said during a floor debate last month. “We are seeing billions and billions of dollars flow into our coffers.”
The GOP leader was referring to the aggressive series of state budget caps that have generated unprecedented surpluses averaging more than $1.8 billion, or 8% to 9% of the General Fund, every year since 2017. About $4 billion from those bounties has been used to bolster budget reserves, but the bulk, about $10 billion, has been dedicated to whittling down the massive pension debt Connecticut amassed over seven decades prior to 2011.
The primary beneficiaries of those payments, Candelora said, involve tens of thousands of state employees, municipal teachers and retirees from those two fields.
“But what about the other 3.4 million people, the people that are telling us we can’t afford to continue to pay property taxes in the state of Connecticut?” he added. “I think we need to start looking at the people that are slipping into poverty, slipping into need, because everything in the state of Connecticut has become unaffordable.”
In late October, House Republicans called for a $700 increase in the state income tax credit that covers a portion of households’ municipal property tax bills.
With the potential to restore $500 million annually, all to the middle class, it would rival the 2023 income tax cuts ordered by Gov. Ned Lamont and the Democratic-controlled General Assembly for the most generous relief package in state history.
But it also would mean this fiscal year’s projected surplus — another big windfall projected at $2 billion — would be about 25% smaller. That means less to pay down pension debt, which still exceeds $33 billion, according to Lamont’s budget office, and isn’t projected to be eliminated until the mid-2040s.
But Candelora said Connecticut could afford a big tax cut and still make big annual inroads on its debt problem. The $10 billion in surplus funds its deposited into the pensions since 2020 were in addition to the more than $3 billion in required payments Connecticut makes annually through regular budgeting. Prior to 2020, Connecticut never had contributed surplus to its pensions.
And since Lamont and his fellow Democrats in the legislature already have diverted some funds away from surplus and into new spending, why couldn’t Republicans deflect some to cut taxes on households in need, the North Branford lawmaker added.
Lamont and Democrats dedicated $300 million from last fiscal year’s surplus to launch a new program to expand affordable child care. That initiative also has a claim on a portion of future surpluses.
And despite repeated warnings that Medicaid costs were exploding, Democrats underfunded the program by $284 million last fiscal year, effectively leaving the problem to be solved using surplus dollars.
“I think I’ve been dragged into this conversation unwillingly by the Democrats,” Candelora added.
House Republicans likely won’t be alone in supporting tax cuts.
Senate Minority Leader Stephen Harding, R-Brookfield, has “serious concerns” about redirecting any funds away from paying down a pension debt, but “if we’re going to do anything [else] with those funds … it needs to be returned to [households] in the form of tax relief.”
The GOP’s two gubernatorial contenders, former New Britain Mayor Erin Stewart and state Sen. Ryan Fazio of Greenwich, both agreed Connecticut can help its middle class and save diligently to reduce debt.
Given the huge budget surpluses Connecticut has reported since 2017, “it’s hard to not ask the question: Are we being overtaxed?” Stewart said.
And while she praised the bipartisan legislative effort eight years ago that helped Connecticut save more, stop tax hikes, and begin reducing debt, the former mayor added it’s still too expensive for many to live here.
“I see that every day,” she added. “Often times, both parents are working and they’re just scrounging by.”
“At some point, middle-class taxpayers are the forgotten people of Connecticut,” Fazio said, adding relief would provide an economic assist as well. “All the evidence suggests that income tax cuts spur more economic growth than other forms of tax cuts.”
Democrats have their own tax-cutting ideas
Republicans also won’t be the only ones putting tax-cut proposals on the table.
Many progressive and moderate Democrats in the General Assembly have been pushing for the past four years to create a permanent state income tax credit for low- and middle-income households with children.
The most popular plan, raised back in 2021 by then-Rep. Sean Scanlon, a Guilford Democrat who now serves as state comptroller, would provide $600 per child, up to $1,800 per household.
The United Way of Connecticut, another leader in the fight for a state child tax credit, vowed to continue the battle in September when it released its latest affordability analysis, showing a record-high 581,000 Connecticut households, about 40%, couldn’t afford a basic “survival” budget.
The United Way estimates it cost a family of four — two parents and two children — $116,000 to cover basic survival needs, including food, housing, utilities, child and health care and transportation in 2023.
Lamont’s budget spokesman, Chris Collibee, said the governor “will listen to any ideas that reduce taxes, increase taxpayers and make our state a more attractive place to live and work.”
Rep. Maria Horn, D-Salisbury, co-chairwoman of the tax-writing Finance, Revenue and Bonding Committee, said this week she anticipates many state tax relief proposals aimed at the middle class in the next session, especially since the GOP-led Congress focused the bulk of federal tax cuts it ordered last July on the nation’s wealthiest households.
“That creates a structure where the very wealthy are receiving a tax benefit and the middle and less privileged classes are not,” she said.
Can CT afford to cut taxes and bolster human services?
But both Horn and House Speaker Matt Ritter, D-Hartford, warn frequently that any tax cuts must be sustainable. In other words, don’t promise so much relief it must be scaled back one year later if the economy slips.
And state legislators are more worried about budget stability now than perhaps any other time since they installed new caps eight years ago. That’s because Congress ordered more than $1 trillion in cuts to Medicaid and other human service programs to help finance federal tax relief.
Connecticut expects to lose hundreds of millions of dollars in annual federal assistance, although the bulk of those cutbacks likely won’t take effect until 2027 or 2028.
Rep. Josh Elliott of Hamden, a progressive who is challenging Lamont for the 2026 Democratic gubernatorial nomination, said many lawmakers still want to put more dollars directly into working families’ hands.
But Elliott, a founder of the legislature’s Tax Equity Caucus, added tax relief is a good tool — but not the only one — to help families.
It does a family little good to save $700 on state income taxes if Connecticut cuts municipal aid so much that same household faces an $800 increase in town property taxes.
Similarly, it state budget policies drive up community college tuition, slash rental and winter energy assistance and ignore rising health insurance costs, then tax cuts help little or not at all.
“It’s not one or the other,” Elliott said. “It seems that there’s a hypocrisy on the part of the Republicans that they are only willing to affect [costs] with tax cuts.”
WILTON, CONN. — CBRE has negotiated the $24.7 million sale of a 221,070-square-foot office building in the southern coastal Connecticut city of Wilton. The two-story building at 50 Danbury Road is home to tenants such as AIG, ASML and Hartford Health Care. Jeff Dunne, Steve Bardsley and Travis Langer of CBRE represented the seller, a partnership that includes an entity managed by Taconic Capital Partners, in the transaction. Shawn Rosenthal and Jason Gaccione, also with CBRE, arranged acquisition financing on behalf of the buyer, Melrose Pfeiffer Holding LLC.
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