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June 21, 2004

Assembly and unions propose $1 billion in new debt for hospital subsidies

Acting at the request of a powerful hospital workers' union, the Assembly has introduced legislation that would increase the state’s debt by $1 billion to buy new health-related technology and relieve hospital operating deficits.

The bill, A.11705, is supported by SEIU Local 1199 and the Greater New York Hospital Association. It would require the State Dormitory Authority, already holding $31 billion in debt, to float $1 billion in bonds for hospital use.

“The bill would put taxpayers further in debt to pay for virtually anything under the sun, including vaguely defined 'continuation of critical health care services' and 'hospital billing systems'” said Elliott Shaw, The Council’s director of government affairs. “The bill introduction claims that the proposal would ‘significantly’ reduce healthcare costs, but nothing in the bill itself suggests that claim is true.”

Local 1199 president Dennis Rivera is the strongest supporter of the bill. Just two years ago, in 2002, the Legislature bowed to pressure from Rivera to enact $3 billion worth of new hospital spending.

Much of that $3 billion went to Rivera’s union members in the form of pay raises and other benefits.

“This is another one of Dennis Rivera’s raids on New York taxpayers,” said Shaw. “The state is already facing billions in debt and the last thing taxpayers need is a even greater burden on our future."

The bill would allow 30 years of repayment on borrowing for costs including computer hardware and software, operating expenses of a nonprofit administrator, and operating costs of health-care facilities.

The bill does not establish a revenue source to pay debt service on the proposed bonds. The state spends $4 billion a year on debt service now.

Supporters of the bill argue that the bond money would be used to invest in new technologies, which would reduce patient safety problems.

“The state's hospital system is already too costly and inefficient,” Shaw said. “It has one of the highest lengths of stay in the country and is already heavily subsidized by state and private employers and has been given numerous handouts over the years. This proposal started off as a massive new government program to help the uninsured but now has morphed into another giveaway program with little accountability."