Hartford, Conn. to seek bankruptcy if no state budget in 60 days


© Reuters. Hartford, Conn. to seek bankruptcy if no state budget in 60 days

By Hilary Russ

NEW YORK (Reuters) – Hartford, the capital city of Connecticut, will likely seek to file for bankruptcy if the state does not have a budget in place in 60 days, Mayor Luke Bronin warned on Thursday.

The cash-strapped city, like others in the state, has been waiting for clarity on how much state aid it will receive in the budget, which is more than two months overdue.

In the absence of a budget, an executive order from Governor Dannel Malloy is guiding state spending, but it severely restricts expenditures.

If no state budget is finalized by November, Hartford will be unable to meet its financial obligations, according to a letter Bronin and other city officials sent to lawmakers.

“We do not have the tools at the local level to solve this problem alone,” Bronin said in a televised press conference.

The city must ask the state for the authority to file for Chapter 9 municipal bankruptcy. Malloy told Reuters last month that he would support such a filing “if it’s the best way to handle their difficulties.”

Connecticut lawmakers have been unable to strike a biennial budget deal with each other and Malloy, in part because they disagreed over a labor contract, which is now settled.

They also disagree about whether to raise revenue and force teacher pension costs onto local governments to help close a $3.5 billion, two-year state budget deficit.

Bronin is asking the state to fully fund its payment-in-lieu-of-taxes formula, which provides money for the huge number of city properties that are non-taxable, including state-owned buildings and colleges.

Bronin also said he wanted the state’s help in negotiating with labor unions and bondholders. Before Bronin took office in January 2016, he served as Malloy’s general counsel.

Given that Hartford’s tax rates are twice as high as those of surrounding communities and that it has previously cut personnel and services dramatically, Bronin said, the answer to the city’s fiscal crisis cannot be more tax increases or service cuts.

Greenberg Traurig, a restructuring firm the city hired in July, has already talked with a major bond insurer and is expected to talk with bondholders soon as well, Bronin said.

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