Hartford Mayor Luke Bronin’s new $613 million city budget needs at least $49 million in extra state and private-sector aid to stave off ugly choices that could include bankruptcy.
And that scenario, the mayor added Monday, still wouldn’t allow Hartford to lower its mammoth-sized 74-mill commercial property tax rate — something Bronin said is a necessity to bring growth and long-term fiscal stability to the capital city.
The mayor’s plan for the 2017-18 fiscal year also hinges on another $4 million in worker concessions, deep cuts to community programs and transit services, and continued reduction of the workforce through attrition.
But Bronin, who briefed reporters in his office Monday, expressed concerns that state officials don’t fully appreciate the unprecedented fiscal threats — of which insolvency is just one — facing Hartford.
“It’s something we’ve been shouting from the rooftops all year long: the city of Hartford cannot deal with a $49 million gap on its own,” Bronin said. “We have done dramatic things to reduce spending and to change our long-term budgets. But at the end of the day, a city that has a mill rate that’s two or three times what surrounding communities have, and a city that’s already running a bare bones service budget, … cannot close that gap without doing enormous damage to the city’s ability to be a successful city in the long run.”
At least $40 M in new state aid is needed
Bronin warned state officials last summer that Hartford was at risk of fiscal insolvency because of a mix of long- and short-range challenges.
And the mayor said Monday that even if state officials grant the $39.6 million million in extra annual state aid he is seeking, that barely keeps the city’s finances above water.
Projections show the mayor’s budget, if backed with the threshold levels of state assistance identified — plus $10 million promised by the insurance industry — also would keep city finances in balance in the 2018-19 fiscal year.
But it’s difficult to envision a route to long-term prosperity and budgetary stability in Hartford that doesn’t include lowering the highest property tax rate — by far — in Connecticut, Bronin said.
The mayor’s budget does not allow for that if state aid grows only by the threshold level.
“We’re going to do everything we can to get our legislators in the General Assembly to recognize how big and how urgent this fiscal crisis is,” he said. “Because as a state, I think we have a huge interest in making sure our capital city is sustainable, is strong, and is vibrant.”
And while Bronin did not threaten bankruptcy, he said in response to reporters’ questions that it remains a very real possibility.
“We are not in a position to rule anything out,” he said.
Surging debt costs force wide array of spending cuts
On paper, Bronin’s budget reflects a nearly 11 percent spending increase from the current $552.9 million bottom line.
But the mayor noted most of that growth is driven by fixed costs. Debt service — because of refinancing gimmicks employed under previous administrations — is projected to be a major cost driver through the 2021 fiscal year.
Spending in this area accounts for nearly half of the $60 million in spending growth.
Health care, pension, payroll and legal costs — the latter including a one-time, $6 million settlement — together represent nearly all of the rest.
Bronin originally hoped to secure worker concessions worth $16.5 million annually. He secured givebacks this year that will save $4 million in 2017-18. And he plans to add at least another $4 million savings in the upcoming fiscal year from further concessions “which we continue to seek aggressively, but which we don’t unilaterally control. … I’m seeking more than that and I’m going to fight hard to get more than that.”
Despite these challenges, Bronin said his budget still includes many painful cuts, hitting programs for seniors, transit services, grants to community groups and events and funding for the arts.
“This is the most painful part of this budget,” he said.
It retains 40 layoffs ordered last year. And while Bronin said he anticipates eliminating more positions due to attrition, he doesn’t believe police officer and firefighter posts can be cut further without triggering “spikes in overtime” which would undermine any savings.
The mayor also said he did not seek any new reductions in support for women’s and homeless shelters and food pantries, or for summer employment, youth violence prevention and library services.
And all of this is going on in the context of long-term poverty trends that are choking city finances and local economic development.
The city not only has Connecticut’s highest property tax rate — at 74.29 mills or $74.29 for every $1,000 of assessed commercial property value — but 51 percent of its property value is exempt from taxation. That includes hospitals, universities, an airport, a trash-to-energy plant, and numerous state offices and facilities.
Long a repository for most of the region’s poor, the city’s median income is about $29,000 per year, and 46 percent of Hartford children live in households with incomes under the federal poverty line.
Private aid is contingent on a path to prosperity
Bronin also urged state officials to remember that crucial, temporary assistance Hartford’s insurance industry pledged this spring doesn’t come without conditions.
Aetna, The Hartford and Travelers promised collectively to send $10 million annually into the city’s coffers for the next five years — but only to complement a state plan to restore Hartford’s fiscal stability and economic viability.
Gov. Dannel P. Malloy’s proposal for the next two-year state budget recommends several steps to bolster finances of Connecticut’s poorest communities.
It would redistribute education aid and end nonprofit hospitals’ exemption from local property taxation.
Bronin’s administration estimates the city would gain $35 million in resources next fiscal year under the governor’s plan.
But Malloy also wants all cities and towns to cover one-third of the required annual contribution to the municipal teachers’ pension fund. The fastest-growing major line item in state finances, the $1 billion contribution Connecticut currently makes is projected — according to an administration study — to grow 525 percent in the next 15 years.
And while poor communities gain right away under the governor’s plan, their pension bill costs would grow much faster than any extra state funds, steadily reducing the net benefit of the governor’s plan over time.
“We understand the financial straits of Hartford and are committed to stabilizing our capital and other fiscally distressed communities,” Chris McClure, spokesman for Malloy’s budget office, said Monday. “This is why the governor’s budget proposal included a substantial increase in funding to Hartford that closely aligns with the amount needed by the city to balance its budget. … Unfortunately, some members of the General Assembly have already closed the door on these proposals that would help bring millions of new revenue to our capital city and other communities while ensuring that those communities’ structural issues are addressed. As Governor Malloy said in February, our towns are intrinsically linked and we rise and fall together. The governor hopes the legislature finds the courage to act.”