Hartford Mayor Luke Bronin warned Gov. Dannel P. Malloy and the legislature Thursday that the capital city is at risk of insolvency within 60 days, absent the additional funding it would receive under a new state budget.
The mayor also renewed his pitch to increase state payments to municipalities to offset the property tax exemptions Connecticut grants to itself and to private colleges, hospitals and other nonprofits.
“The time has come to decide, together, what future we want for our capital city,” Bronin wrote in a letter to state leaders. “If the state fails to enact a budget and continues to operate under the governor’s current executive order, the city of Hartford will be unable to meet its financial obligations in approximately 60 days.”
Bronin is counting on about $40 million in new state aid and $10 million in assistance from major corporations in Hartford to help balance the city’s finances this fiscal year.
But Malloy and legislators from both parties have been unable to settle on a plan to close major, projected state budget deficits. State finances, unless adjusted, are projected to run $1.6 billion in deficit this fiscal year and $1.9 billion in the red in 2018-19. Both potential shortfalls represent gaps between 8 and 9 percent.
Since the new fiscal year began on July 1 without a new two-year budget, Malloy has been forced to run state finances by executive order.
The governor, who has limited choices on where to curtail spending, has focused most of his cutbacks on municipal aid and on social services provided by private, nonprofit agencies.
That’s because other segments of the budget, such as retirement benefits, debt service and Medicaid, are largely fixed, either by contract or by federal entitlement rules. And the retirement benefit and debt service costs are surging this fiscal year by hundreds of millions of dollars.
“I would say that the sense of urgency up here is 10 out of 10, and that letter just reinforces that,” House Majority Leader Matt Ritter, a Hartford Democrat, said Thursday, adding that he communicates with the mayor on a near-daily basis. “I appreciate all of the hard work they are doing locally, and we understand we need to do our part as well.”
Ritter added that lawmakers are aware that Hartford is not the only community facing severe cash flow issues in coming months. News reports have outlined concerns in West Haven and Scotland, and Malloy has directed the state Office of Policy and Management to survey all municipalities on their fiscal solvency.
“We could not agree more with the urgency of the situation, particularly for the city of Hartford,” Meg Green, a spokeswoman for the governor, said. “With rising fixed costs, eroding revenues, and limited powers, executive authority does not provide flexibility for allotting funds in the absence of a budget passed by the General Assembly. Inaction was not an option and we needed to sharply reduce spending in many areas – including spending that we all agree is important and worthwhile, such as municipal aid. We recognize this is difficult for the municipalities as many communities will face cash shortfalls if we continue forward without a state budget.”
The mayor warned state officials more than one year ago that Hartford was at risk of insolvency during the 2017 calendar year.
The city not only has Connecticut’s highest commercial property tax rate — at 74.29 mills or $74.29 for every $1,000 of assessed 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.
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.
Bronin announced in early July that he had hired an international law firm specializing in financial restructuring, Greenberg Traurig LLP, to evaluate the capital city’s options as he nears a decision on whether to pursue bankruptcy.