Bridgeport casino, Hartford debt aid complicate CT budget talks
With just five days left in the legislative session, a stubborn wrinkle is complicating efforts to craft a new state budget: regional politics.
How much might a new casino benefit the city of Bridgeport?
Could even studying that option hurt Connecticut’s southeastern corner, where two major casinos have been operating for decades?
How much aid to keep Hartford out of bankruptcy is too much for the rest of Connecticut to bear?
And is that a fair question when some want to ensure wealthy Fairfield County communities don’t lose one penny of education aid?
“Our delegation’s backs are against the wall, and we need to do something about it,” said Rep. Christopher Rosario, D-Bridgeport. “The last time I checked the city of Bridgeport was in the state of Connecticut. … And we are facing death by a thousand cuts.”
The state’s largest city — and one of its poorest — has been decimated, Rosario said, by the steady erosion of Connecticut’s social services safety net in recent years.
And with municipal aid reduced this fiscal year, Bridgeport legislators felt they had no choice but to promote a bill that would study the feasibility of siting a new casino. Although the study isn’t limited to Bridgeport, local lawmakers say their community would be an attractive site.
“On every issue we care about we’re getting punched in the nose,” Rosario added. “And if people don’t like it (the casino study bill) — so be it.”
But legislators from southeastern Connecticut feel differently.
Two of the region’s largest employers are the Foxwoods Resort Casino, run by the Mashantucket Pequot tribe, and the Mohegan Sun, run by the Mohegans.
The tribes secured state approval last year to open a satellite casino in East Windsor to help them compete against a new MGM Resorts International casino set to open in late August or September. That approval was contingent on federal approval of changes the tribes sought to the compacts governing gaming between the state and the tribes.
Federal officials still have not ruled on that application. But 13 legislators, mostly from southeastern Connecticut, wrote a letter Wednesday to the General Assembly saying the casino study bill “is meant to derail the East Windsor project.”
Sen. Heather Somers, R-Groton, who signed the letter, said Thursday she considers the state budget and the casino study bill to be linked issues.
“Thousands of jobs are at risk,” Somers said, “and hundreds of millions (of dollars) in revenue.” Connecticut expects to receive $274 million in video slot receipts from the casinos this fiscal year and $204 million in 2018-19, according to a revenue forecast released Monday.
For decades the tribes have provided 25 percent of annual video slot revenue to the state, and in exchange the tribes have an exclusive right to offer video slot gaming in the state.
If a casino were opened in Bridgeport or elsewhere in Connecticut by an operator other than the tribe, it would break that agreement and undermine any gaming facility in East Windsor.
“What message does that (study bill) send” to the tribes? Somers added.
Sen. Cathy Osten of Sprague, the Senate Democratic chair of the Appropriations Committee, said she would fight to defeat the casino study bill if called in the Senate. “It is a fairness issue for two of our largest employers,” she said.
But Osten quickly added she would not oppose a new state budget deal if somehow the casino study measure advances. “I don’t think this is a budget issue,” she said, adding that too many other important issues are at stake.
The House debated the casino study bill for one hour late Thursday night before tabling it at 11:45 p.m. Majority Leader Matt Ritter, D-Hartford, said it was shelved because of the late hour, but also that House leaders expect to resume debate soon, possibly as early as Friday.
The measure would direct the commissioners of the Economic and Community Development and of Consumer Protection to invite potential casino developers within 90 days to submit proposals for a gaming facility.
It must involve an investment of at least $500 million and envision creating a minimum of 2,000 jobs.
Any developer would have to pay a $50 million licensing fee and $5 million application fee to the state, and agree to share 25 percent of gross revenue from all gaming and wagering activities. It also would have to be prepared to provide a minimum $8 million annual payment to a host community.
No casino could be developed, though, unless authorized in a future session by another vote of the legislature.
“This bill does not in any way authorize the construction of a casino,” Rep. Steven Stafstrom, D-Bridgeport, said. “This merely allows for a full, frank and honest discussion by this General Assembly moving forward.”
“We have a lot of members … that really appreciate the free market and want to see what is out there and what Connecticut could get,” added Rep. J.P. Sredzinski, R-Monroe, another supporter of the bill.
MGM has expressed an interest in building a new casino in Bridgeport.
“MGM has been unwavering in our commitment to build a destination resort in Connecticut,” MGM Senior Vice President and legal counsel Uri Clinton wrote in a statement early Friday morning. “We would like to make significant investments in the community and help spur economic growth in the region and the state. We remain ready and willing to participate in an open, transparent, competitive process, consistent with industry best practices, that offers a chance to compete to do business in Connecticut. … It is the best way for the state to maximize jobs, economic growth and revenue.”
With Democrats holding a slim, 79-71 edge in the House and the Senate split 18-18, leaders of both parties have said the budget plan most likely to pass is one with bipartisan support.
But sources say the two sides remained bogged Thursday over several issues including: transportation, public colleges and universities, the Husky health insurance program for poor adults; and state aid to school districts.
“When you start with small (partisan) margins in both chambers, all you can do is try to take a balanced approach,” said House Speaker Joe Aresimowicz, D-Berlin.
What happens when regional politics get in the way?
Aresimowicz said they have made budget talks more challenging this year, but added he doesn’t believe they will prove a deal-breaker. “Hopefully there will be enough good things in the final package to attract bipartisan support,” he said.
Vilifying Hartford or restoring legislative intent?
And then there’s the problem of Hartford.
Republicans and some Democrats have been saying for weeks that Gov. Dannel P. Malloy and state Treasurer Denise L. Nappier exceeded legislative intent when they signed a debt assistance deal to help keep the capital city out of bankruptcy.
Malloy and Nappier both say the agreement complies with the authorizing language built into the state budget adopted last October, and that some lawmakers simply don’t understand the bill for which they voted.
Under the deal, the state will pay off the entire principal on Hartford’s general obligation debt, about $534 million, over the next two or three decades — as well as an undetermined amount of interest. The total will depend on how the city’s debt is renegotiated with bondholders.
That’s expected to amount to annual debt assistance of about $40 million per year over that 20- to 30-year period.
Critics say the legislature only authorized two things:
- About $40 million in annual assistance for this fiscal year and next.
- And that the state would guarantee the refinancing of Hartford’s debt. That could leave Connecticut on the hook to pay more in the future, but only if Hartford defaulted on its payments.
GOP lawmakers have proposed language for the next state budget designed to effectively neutralize the debt assistance after the 2018-19 fiscal year.
The proposal is to reduce traditional municipal grants to Hartford each year, starting in 2020, by an amount equal to the debt aid the city receives in the same year.
But members of Harford’s delegation, not surprisingly, have a problem with that.
“I take offense to it,” said Rep. Brandon McGee, D-Hartford. “I understand additional dollars coming to Hartford will have an impact on other districts. But we were all elected to come here to help our individual districts.”
The state pledged tens of millions of dollars in state spending, loans and tax breaks to help one of southeastern Connecticut’s largest employers, General Dynamics’ Electric Boat shipyard in Groton, ramp up for increased submarine production.
And while it will help EB grow its workforce significantly, those dollars also could have been invested in some other part of Connecticut. Why is that acceptable but keeping the center of the state’s insurance industry solvent is not?
“That’s the question we’re asking here?” McGee said. “We all benefit from driving into the great city of Hartford.”
But Rep. Chris Davis of Ellington, ranking House Republican on the Finance, Revenue and Bonding Committee, said many in the GOP still feel the Hartford matter must be addressed in the new budget.
“I think it is an important step in the (budget) discussions,” Davis said, adding most legislators still believe the debt aid exceeds their authorization.
Further complicating matters, the additional burden will push the state beyond a key warning threshold in its statutory debt limit system.
Traditionally, the legislature has acted to reduce planned borrowing when it exceeds that mark, and Davis said he believes when that happens, it should have implications for the capital city.
It probably means the GOP won’t support proposed new borrowing to upgrade the XL Center downtown. And if previously authorized borrowing for various projects must be canceled, “the logical step,” he added, “is to reduce borrowing in other projects for Hartford.”
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