Hartford’s future is the future of Connecticut
When the political rhetoric calls vaguely for “shared sacrifice,” it is arrangements like the state’s guaranteeing of Harford’s debt that spell out who is sharing, how painfully, and whether it’s worth the hurt.
In return for the state paying the city’s half-billion dollars in debt, including $40 million in each of the next two fiscal years and perhaps thereafter, Hartford will enter a five-year recovery plan that calls for no borrowing; balances the budget for at least the next two years; and puts it under the oversight of the state’s Municipal Accountability Review Board. The recovery factors in significant spending cuts, strategic growth plans, corporate contributions and debt restructuring.
Most unusual, in Connecticut’s recent climate of public employee labor negotiations, the city got earnest and meaningful concessions from several unions: four years of no wage increases and higher employee health care premium shares and pension contributions.
The rest of the state will share in the sacrifices to the extent that helping Hartford affects available assistance to other municipalities, including state bonding money for school buildings.
The effects of the deal made by the Malloy administration with Hartford followed on the heels of last year’s vote by the legislature to offer aid in the current two-year budget. It will be lengthier and more costly than Republicans and some Democrats are saying they intended. Both caucuses’ proposed budgets would reduce traditional state aid to Hartford after this year, in effect canceling out the increased assistance.
In a prior editorial we saw some logic to this approach, but a deeper dive has led to the conclusion that Hartford’s fiscal situation is so perilous that cuts in state aid would likely result in the capital city going bankrupt, defeating the purpose of the rescue plan.
The pain that would follow for all of Connecticut would be demoralizing. It would cement the idea of a failing state that is unappetizing to business, a place unable to capitalize on its topof-the-heap education levels and per capita incomes. It would loudly proclaim that Connecticut doesn’t have the will to marshal resources on behalf of its land-poor urban centers, not even its capital. And where would that leave small cities like New London and Norwich? Less than nowhere.
The General Assembly retains control over what eventually happens to the deal. However, the effect of the announcement that the state would be paying the city’s debt long-term resulted in a significant upgrade of the city’s bond ratings by Moody’s Financial Services and a signal from S&P Global Initiatives that its analysts are watching. Ultimately, that could mean the state would have less interest to pay off on the city’s behalf.
Hartford’s growth potential is impressive but choked by the same factors that have led to its debt. Excluding state and municipal workers, Hartford has about 100,000 daily commuters, according to Mayor Luke Bronin, making $9.2 billion in wages — more than any other Connecticut city. It is chock-full of tax-exempt but prestigious and valued hospitals, cultural and educational institutions, regional sewage treatment and trash disposal facilities, state property, and nonprofit agencies. Half its property is not subject to local taxes.
PILOT funds from the state, which are supposed to close the revenue gap caused by this untaxable property, have dwindled to a fraction of the promised support.
Unemployment in some Hartford neighborhoods is 25 percent, and its tax rate is an astounding 74.29 mills. Per capita income and home ownership are Connecticut’s lowest.
Past leaders have made some terrible decisions that contributed to Hartford’s fiscal crisis. But Mayor Bronin is making a sustained attempt to right the ship. To drive a recovery, he needs the breathing room the state rescue plan provides. The city is beginning to benefit from residential development, from “insurance tech” companies moving in to support the large insurers, and from advanced manufacturing linked to the aerospace industry.
The rescue deal allows the city to create partnerships like the $10 million annual commitment it has gotten from Hartford’s corporations and to make its case for game-changing revitalization and public transportation. In contrast, abandoning the city to bankruptcy promises years of stagnation and likely further decline.
In back-and-forth late last week, House Minority Leader Themis Klarides, R-Derby, said the commitment would put the state over its debt limit and State Treasurer Denise Nappier fired back with a letter declaring that it would not. Gov. Malloy said he will work with the legislature, or act alone if need be, to keep within the debt limit while still supporting the Hartford relief plan.
This deal is a drastic but credible solution to Hartford’s dilemma. Like the state, the city had been putting off its ballooning obligations. Hartford is now making sacrifices that the state could emulate as it seeks the political will to make tough decisions on public policy for the long-term good.