Paramedic care in southeastern Connecticut could be among hospital services in jeopardy under Gov. Dannel P. Malloy's proposed two-year state budget.

That message was delivered to the General Assembly's Appropriations Committee Friday by Ron Kersey, coordinator for emergency medical services at Lawrence + Memorial Hospital in New London. Kersey, who also manages the paramedic intercept program at L+M, told lawmakers during a public hearing in Hartford that the 27-year-old paramedic service is running a $500,000 annual deficit and will not be able to continue providing mobile medical care services without financial support from the seven shoreline area towns it serves.

The seven towns - East Lyme, Groton, Ledyard, New London, North Stonington, Stonington and Waterford - are also facing significant financial challenges, he said.

"Once upon a time," he said in his testimony, "the hospital was able to absorb this loss. Not anymore, however."

The hospital is in a "challenged fiscal condition" due to cuts in insurance reimbursements and the hospital receipts state tax already being imposed over the last four years that is due to increase under Malloy's plan, he said.

Kersey was among several representatives of hospitals around the state testifying at the hearing on the budget plan. Steve Frayne, senior vice president for health policy for the Connecticut Hospital Association, said the governor's budget would increase the gross receipts tax - the tax imposed on hospitals' patient care revenues - from $349.1 million in the current fiscal year to $514.4 million annually. The tax was originally enacted in 2012 as a way of leveraging federal dollars and returning the funds to hospitals, but has instead morphed into a true tax that, along with other cuts, is "eroding hospitals... and causing patient care and access to suffer," Frayne said.

Malloy's budget would also reduce by more than $100 million per year the Medicaid reimbursement rates paid by the state to hospitals, as well as imposing new regulatory burdens, he said. Seth Van Essendelft, chief financial officer of L+M, said hospitals cannot pass along the increased hospital tax to patients because of fixed reimbursement rates for Medicare and Medicaid and negotiated rates with insurers. Essentially hospitals are being asked to provide the same services for less, he said.

Gian-Carl Casa, undersecretary of legislative affairs for the state Office of Policy and Management, said Malloy's budget provides adequate funding for hospitals.

"While the governor's budget proposed revenue and expenditure changes that directly and indirectly affect hospitals," he said, "we think the hospitals can absorb the reductions without an impact on the quality of care."

He cited a September 2014 report by the state Office of Health Care Access showing the state's 30 hospitals earned $333.6 million on income from operations in fiscal 2013, and $263.2 million from non-operating revenue sources. Those figures show substantial increases since the expansion of Medicaid in fiscal 2009, he said.

Hospital net assets, he said, totaled $5.6 billion in fiscal 2013, compared to $3.6 billion four years earlier.

"Payments to hospitals under the state Medicaid program are expected to be about $1.8 billion this year," he said. "Ten years ago, they were $785 million."

Bill Stanley, vice president for development and community relations at L+M, said the figures are being misinterpreted by the governor's office. He said that while more patients are now covered by Medicaid, the reimbursement rates for that program only cover about 66 percent of the actual costs of care.

"They are demonstrating a lack of understanding about hospitals and health care and how we function," he said.

The tax increases and reimbursement cuts proposed in the governor's budget would reduce L+M's revenues by $9.6 million over fiscal years 2016 and 2017, he said, at a time when the hospital can least afford it. L+M ended the last two fiscal years in the red, and is now working on a "clinical sustainability initiative" to "do more with less and get back into the black," Stanley said.

"We're faced now with additional losses that will make it more difficult," he said.

In his testimony to the Appropriations Committee, Stanley told lawmakers that hospitals would continue shouldering an unequal share of the funding cuts Malloy has proposedto close a projected $1 billion annual deficit.

"Connecticut hospitals are wondering what we've done to deserve this disproportionate assignment of 'shared sacrifice,'" he said.

Hartford HealthCare, the parent of The William W. Backus Hospital in Norwich, is also predicting staff and service cuts if the budget proposal is adopted.

"The cuts proposed for hospitals are deeply troubling, for us as care providers and major employers, and for the patients and families who rely on us," Rebecca Stewart, Hartford HealthCare spokeswoman, said in an email message. She said that two years ago, budget cuts of $111 million caused layoffs and service reductions.

"There is no doubt whatsoever that, if adopted, the cuts being proposed now would have a severe impact on our hospitals' ability to serve as a community safety net," she said.

j.benson@theday.com

Twitter: @BensonJudy