Hartford skyline
Hartford skyline

After dominating the final months of the 2018 General Assembly session, the political battle over Connecticut’s bailout of Hartford dissolved this spring with nary a whisper.

Lost amidst other legislative issues and weakened by a concerted effort to control spending in Hartford, the push to effectively revoke most of the $500 million-plus in debt assistance to the city petered out fairly quickly.

Republican legislators, who spearheaded the push to gut Hartford’s aid, made no serious attempt to revive it this spring.

Majority Democrats, many of whom backed the 2018 GOP initiative, moved on to other issues, like raising the minimum wage and establishing paid family and medical leave.

And Gov. Ned Lamont, who wasn’t in office last year but had criticized the bailout deal on the campaign trail, focused on closing a major budget deficit and boosting municipal aid.

Senate Minority Leader Len Fasano, R-North Haven Keith M. Phaneuf / CTMirror.org

“We had so many things coming at us from all different angles this year and this one just slipped through the cracks,” Senate Minority Leader Len Fasano, R-North Haven, told the CT Mirror, adding Republicans were focused on opposing the minimum wage hike, paid leave and the push to legalize marijuana sales for recreational use. The first two initiatives were enacted but the pot legislation died.

But House Majority Leader Matt Ritter, D-Hartford, said the city’s track record over the past 12 months, coupled with the success of the state’s fiscal intervention program, is why the bailout debate has subsided.

The state’s Municipal Accountability Review Board or MARB “has demonstrated, and that [debt assistance] deal has demonstrated, that this is all working,” Ritter said. “It has made significant changes to the city’s finances. They do have a trajectory and a path forward.”

Fasano and House Minority Leader Themis Klarides, R-Derby, were surprised and outraged in early 2018 upon learning then-Gov. Dannel P. Malloy had signed a deal for the state to pay off most of the city’s bonded debt.

But GOP leaders weren’t the only ones surprised.

Many lawmakers thought they’d authorized no more than $80 million in emergency aid —$40 million each in 2018 and 2019 — to keep Hartford out of bankruptcy. Instead, Connecticut was on the hook for an estimated $530 million in debt — to be paid off over several decades.

House Majority Leader Matt Ritter, D-Hartford ctmirror.org

Democratic leaders weren’t outraged at the deal, but conceded that wasn’t what they envisioned when the legislature authorized the bailout in November of 2017.

Republicans, who had a louder voice one year ago because they held 18 of the 36 seats in the Senate and nearly half of those in the House, moved quickly.

They crafted a bill that would effectively reduce non-education grants to Hartford annually by an amount equal to any debt payments made on the city’s behalf that same year.

Dozens of Democrats — including Ritter and others from Hartford — voted for the bill, which passed easily with broad, bipartisan support.

Malloy, who wasn’t seeking re-election and who insisted he’d followed the bailout legislation properly, vetoed it. And bailout critics looked forward to 2019 and a new governor.

There were some indications that Lamont was sympathetic to the cause. He said on the campaign trail that he would have liked to have seen some sacrifice on the part of Hartford’s creditors as part of the debt assistance deal.

“Hartford ended up being a bailout for the bond-holders and the bond insurance guys,” Lamont said in early October.

Lamont went on to win the 2018 election, with fellow Democrats regaining their majority in the Senate and expanding their lead in the House. Once the 2019 session got underway in January, the bailout deal didn’t appear to be on anyone’s agenda.

Hartford officials helped their own cause, Ritter said, cutting spending and stabilizing the budget.

“I can’t remember the last time I read an article about the city of Hartford’s finances,” he said. “The city has found a level of stability.”

Though final, audited numbers won’t be available until this fall, Mayor Luke Bronin said they will show the city closed the 2018-19 fiscal year on June 30 with a surplus — some of which will be invested in capital projects and some dedicated toward rebuilding Hartford’s emergency budget reserve.

Two major, Wall Street credit rating agencies, Moody’s and S&P Global, both upgraded the city’s bond rating within the past year.

Hartford Mayor Luke Bronin HBJ

“We have worked hard to maintain and deserve the trust of all of our partners, from taxpayers to businesses to residents to legislators,” Bronin said. “And I think what we’ve shown is we were honest about the challenges we faced, we were serious about tackling them in a real long-term way and we stuck to our plan.”

Bronin, who inherited debt-riddled city finances when he took office in 2016, added Hartford has incurred no bonded debt during his tenure with one exception: the issue of revenue bonds three years ago by the city’s stadium authority to complete work on Dunkin Park, home to the Hartford Yard Goats baseball team.

Lamont’s budget director, Melissa McCaw, was Hartford’s finance director under Bronin until this past January.

McCaw said the state program launched in 2017 to target and assist distressed municipalities has been enhanced significantly over the past year.

And while some municipalities remain in tough straits, these steps “have been and will be beneficial to promoting economic growth, preventing fiscal crisis and aiding the recovery of our great cities and towns,” McCaw said.

She added that “this also requires that municipalities be engaged and willing to make the necessary changes to correct their course. We have seen it in Hartford.”

One key enhancement developed by the Lamont administration and this year’s legislature better positions Connecticut to target communities at risk even sooner than before.

Another entity, the Municipal Finance Advisory Committee, has been empowered to identify early indicators of potential distress — multiple years of budget deficits or exhausted fiscal reserves — and to designate those communities for further oversight.

“This is a critical milestone as financial distress often has warning signs that if heeded to go along with strategic corrective actions can mitigate severe financial distress,” McCaw said.

Office of Policy and Management Secretary Melissa McCaw

House Republicans did raise the bailout issue once this past spring. As the chamber debated a technical resolution related to state borrowing, GOP leaders proposed an amendment that offered a statement of protest — but little more.

The amendment specifically said it never was the legislature’s intent to pledge more than $500 million in debt assistance to the city. The Democrat-controlled House rejected the amendment.

Deputy House Minority Leader Vincent J. Candelora, R-North Branford, said it was clear the legislature wasn’t going to re-litigate the matter this year.

“I don’t think the Democrats ever intended to undo that deal,” he said, adding lawmakers should revisit the matter before another municipality is at risk of bankruptcy. “I think there should be a greater conversation about this again, since it never was the legislature’s intention to give out that much money.”

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Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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9 Comments

  1. Hartford would be far better off in bankruptcy because it would have helped them break out of unsustainable contracts and services that are at the heart of their problem. Gov. Malloy (and his cronies) again made the wrong decision, and democrats from our other cities were foolish not to stop them – they will live with that decision.

    Make no mistake, Hartford is still on borrowed time as we are not seeing tax rates come down or significant economic growth, and until that happens (in a very big way), large employers and enterprises from other states will avoid the city. To keep this in perspective Hartford’s effective tax rate for large businesses is still higher than New York City or Boston! Think about it and then ask if bankruptcy would have been a better choice – the answer is simple but embarrassing for those politicians in charge and very painful for those that live there.

    1. Exactly! The labor contracts which caused this fiasco are still in place with no end in site. Coupled with the archaic and obsolete tax system which doesn’t tax renters, the majority of inhabitants (myself included) who use the VAST majority of services and cause MOST of the crime, but strangles property owners and businesses who would be the REAL source of growth and sustainment.
      Unless real changes happen, I see Hartford follow the paths of Detroit and Baltimore with no one to blame but themselves for electing corrupt, pandering, and self-serving politicians.

  2. It was a deal by the Gold Coast Oligarchy with the political insiders that live in, or around Hartford, so there was little chance that the Hartford bailout was going to be allowed to become a significant, budget-year issue…

  3. Unless and until regionalism is embraced, the city of hartford and the other small cities in CT in fiscal distress will continue to need substantiaal assistance from the state of CT. Economies are regional. These cities are geographically too small to be economically viable and competitive.

    1. I cannot agree with regionalism. Its not thw suburbs fault that all CT cities are where they are. Its dem pols fault. They lavished these unbeatable contracts to city employees while knowing there was never areal way to pay for it. They have not made any structural changes to help themselves. Its not the fault of the suburbs to pay for it. Besides, through the state and its taxes, we do already pay for these cities. The bailout is exactly the regionalism you talk about.

    2. During the War Hartford along with New Haven and Bridgeport were some of America’s most prominent industrial cities. Afterward they failed to make the transition. Not because they’re “too small”. Failed City leadership encouraged their most capable citizens to exit.
      And 50 years later its still failing.

  4. It’s pretty disgraceful when the Senate Minority “Leader,” allegedly a fiscal conservative, regards not dealing with a ridiculous $500+ million cost to State taxpayers as having ‘slipped through the cracks.’

    As far as touting the success of the State bailout program and Hartford’s financial ‘success,’ I’m sure everyone would enjoy and improved financial status if someone else paid off our debts.

    1. The $500 million the state will pay for Hartford’s bonded debt, allows some retired Hartford police to collect a $129,977 a year pensions after exactly 20 years worked. It allows layers of Hartford BOE positions that pay 187K a year. Nice gigs if you can get them but the day of reckoning came and the state gave Hartford a pass, until the next day of reckoning.

  5. Hartford is one of the nation’s most impoverished cities and has been for many decades. Why are CT leaders of both parties so reluctant to subsidize business investment that would provide good jobs for Hartford residents ? And thereby encourage a City with good schools, housing – one we could be proud of as our State Capitol. Or are Hartford residents to remain in despair forever. What other prominent State in America has its Capitol’s economy in such disrepair as CT ?
    Aren’t there any Democratic or Republic leaders who want to create a viable Hartford ?

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