Hartford Business Journal

www.HartfordBusiness.com December 21, 2015 • Hartford Business Journal 13 Bye takes away lessons learned in tough budget fight By Keith Griffin kgriffin@HartfordBusiness.com B eing a state lawmaker is supposed to be a part- time gig, but it was more of a full-time role in 2015 for state Sen. Beth Bye (D-West Hartford). The legislature was in constant budget negotiations this year as the $40.3 billion, 2015-2017 biennial state bud- get passed in June quickly fell out of balance. As Senate chair of the powerful Appropriations Committee, Bye had input on key decisions on the state's spending priorities. "It was a big learning year," Bye said. "We had to define our priorities. It's going to continue to be a challenge. I've learned so much about the budget and I've learned about myself. I've learned what's important to people who live here. It gives me a good understanding of residents' priorities." Bye and her fellow policymakers finally finished their 2015 work when they passed a deficit-mitigation plan Dec. 8, which cut $350 million from the budget and provides modest business-tax relief. While lawmakers have taken the lion's share of blame for a budget that went out of balance nearly as quickly as it was passed, Bye said ratings agency Moody's, the state's revenue predictor, shares some fault. She said Moody's was off in its growth projections across the country because of the continued slow recov- ery from the recession. In Connecticut alone, the rev- enue projections were off by $100 million. "The biggest difference is wages have remained deflated," Bye said. "Economics is not an exact science." "What we have here is a revenue problem," said Bye, adding that income taxes and other revenues are com- ing in lower than expected. "If your revenues aren't com- ing in, you have to go to spending." Bye said the original budget lawmakers passed in June had cut $600 million in current services spending from the 2015-2016 fiscal year. "We started off with a budget that was less," she said. Bye said one story that was overlooked and that she is proud of is the legislature's commitment to tackling mental- health issues in the current budget. She said legislators were able to help constituents with mental-health needs and devel- opmental disabilities with a multi-million dollar investment. "We have a mental-health crisis and a developmental- disability crisis," Bye said. The General Assembly didn't cut spending in those areas because lawmakers felt it was a vital Karl's 'difficult' year includes budget cuts, merger By Greg Bordonaro gbordonaro@HartfordBusiness.com P eter Karl doesn't mince words when he describes the year he and his hospital sys- tem, Eastern Connecticut Health Network (ECHN), experienced. "It was very difficult," said Karl, who leads ECHN's two hos- pitals — Manchester Memorial and Rockville General — as well as other subsidiaries that collec- tively posted a $1.9 million loss in fiscal 2015, which ended Sept. 30. Fewer emergency department visits and state budget cuts, Karl said, eroded ECHN's bottom line, forcing management to cut 143 full- time positions and roll back some employee benefits in 2015. Karl and his fellow hospital CEOs also got caught up in politi- cal cross-hairs as Gov. Dannel P. Malloy criticized not-for-profit hospitals for paying their top executives too much. There was some good news: In June, ECHN announced it found a new acquisition partner after its deal with Tenet Healthcare fell apart at the end of 2014, raising much uncertainty about the health system's future. California for-profit healthcare operator Prospect Medical Hold- ings Inc., which owns 13 hospi- tals in three states, is currently seeking regulatory approval to purchase ECHN. The deal, Karl said, will help ECHN extinguish $78 million in debt and provide a minimum of $75 million for capital improvements over five years. Other deal benefits include the ability to reduce expenses through greater economies of scale and advance ECHN's population-health management efforts, which have become a focus for government payers in particular. Prospect is the same compa- ny that wants to purchase Water- bury Hospital. Karl said he is optimistic regula- tors will be more open to Prospect's acquisition without placing the types of restrictions, like wage and Quick helps Frontier hold steady in CT By Matt Pilon mpilon@HartfordBusiness.com P aul Quick, tapped as Frontier Communications' general manager in late 2014 to oversee its Con- necticut operations, is quick to describe the com- pany's launch as "a little ragged." As many as 10,000 of its customers, roughly 1 percent, experienced service outages and other problems in the weeks following Frontier's $2 billion acquisition of AT&T's wireline business. That spurred Frontier to offer custom- er rebates. Its executives were also called before state util- ity regulators to explain the technical and service snafus. But Quick says he takes plenty of positives in how the company rebounded in 2015. "After what I would say was probably a rough start, after the first 90 days I think we really hit our stride," Quick said in a Nov. 19 telephone interview. A year ago, Quick said he wanted to take market share, win back cord cutters, upsell customers to more premium services, deliver financial results, improve customer service, and solidify Frontier's branding in Connecticut, where it's headquartered but didn't have telecom operations prior to the AT&T deal. Though it's not clear if Frontier has a net gain or loss of Connecticut customers since its AT&T acquisition was completed, the publicly traded company, which has more than 2,700 workers in the state, has managed to keep its Connecticut customer revenue stable, averaging $253 million per quarter through the first three quarters of 2015, according to its financial filings with the U.S. Securities & Exchange Commission. Continued Continued Continued

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