Future of Conn. cities hangs in the balance

Elections could make difference

Four of the state’s five largest cities — Bridgeport, New Haven, Hartford and Waterbury — are struggling near financial insolvency, with high unemployment, low property values and snowballing debt.

Danbury, Stamford and Norwalk have fared better, but still can’t compete with Boston or

New York to draw the businesses and millennials that experts say the state needs for an economic turnaround.

The upcoming statewide election may be a turning point for Connecticut cities’ economic and political futures.

Democrat Ned Lamont’s strategy is to invest. Republican Bob Stefanowski says cut taxes and let the benefits trickle down. Oz Griebel, an unaffiliated candidate who trails in the polls, advocates reducing costs, increasing revenue and using the state’s emergency reserves.

“We’re a small state,” said Lamont, a Greenwich cable entrepreneur turned investor. “If we want to keep our small towns and we want to keep our green space, we better have cities that attract business, that attract residential development and have lower taxes. You don’t want businesses built in cornfields.”

Lamont’s urban agenda is the centerpiece of his website’s economic plan; Stefanowski’s urban agenda is not on his site.

“Improving Connecticut cities is among my top priorities,” he wrote in an email. “Tax cuts are the most important thing we can do to help turn our cities around.”

“The situation is so desperate, the next recession is really going to be a dramatic impact on cities.”

Joe McGee, vice president of public policy at the Business Council of Fairfield County

High costs, unemployment

Mismanagement is not the cause of the

cities’ plight, but rather the high costs associated with poverty and growing pension liabilities. The local property tax — which Connecticut cities rely on — is insufficient to sustain them.

“The situation is so desperate, the next recession is really going to be a dramatic impact on cities,” said Joe McGee, vice president of public policy at the Business Council of Fairfield County. “The cost of dysfunction of our cities — the amount of money that is transferred from suburbs to cities — is at record levels.”

Waste myth

State aid to cities ultimately comes from taxpayers. Suburbs provide the majority of the state’s tax dollars. If suburban legislators chose to stop helping Connecticut cities, the suburbs could expect to see many negative impacts.

“If (a city) declines, so too do its neighbors, initially with less jobs/income, leading to less housing demand, lower retail sales, eventually flight and population decline and the consequent reduction in values, taxes and services,” said Michael Freimuth, executive director of the Capital Region Development Authority.

It is a myth that Connecticut cities’ wasteful spending have caused their fiscal woes, experts agree.

“There’s just been a concern that the cities are not well-managed, that they’ve made their own problems,” said McGee. “But that’s not really true.”

Many cities have made drastic cuts to keep their costs down.

“We went so far as to

only have our libraries open three days a week at one point,” said New Haven Mayor Toni Harp. “Even now they are not open full time.”

To cut costs, Lamont and Griebel agree that information technology departments of cities and their school systems should be consolidated. Griebel suggested privatizing trash collection and all other appropriate city services. Stefanowski would reduce unfunded mandates on municipalities to lower costs, he said.

Connecticut cities also have high pension liabilities due to generous retirement and health care benefits promised to municipal workers over decades.

Only Griebel said his urban plan included negotiating with the city unions to align their benefits with those in the private sector. Lamont said cities would mostly have to “work through that” on their own.

Insufficient revenue

Connecticut municipalities are more dependent on the property tax than towns in any other state, according to the nonprofit Lincoln Institute of Land Policy. With their small size, weak grand lists and vast swaths of taxexempt property, the local property tax is not enough.

“Connecticut cities are really fiscally disadvantaged in a way that cities elsewhere are not,” said David Schleicher, a Yale Law School professor, who studies municipal bankruptcy and urban development.

The cities are geographically tiny and thus, so too are their tax bases. Bridgeport, with the highest population in the state, is 16 square miles.

Part of Stamford’s economic success was its annexation of North Stamford in 1949, said Freimuth. As a result, the city is 38 square miles with a mix of suburban and urban properties to support it. Danbury and Norwalk also have strong residential areas.

Cities’ taxable property is also reduced by the fact that many state government buildings, universities, hospitals and nonprofits are concentrated there.

In New Haven, where Yale University sprawls, 55 percent of property is tax exempt, said Harp.

“The percentage of nontaxable property would not matter if the amount of property tax was adequate to allow cities to deliver basic services,” said Hartford Mayor Luke Bronin. “In Hartford’s case, this is a city that has a taxable property base that is barely larger than towns like Glastonbury or Farmington — and about 50 percent smaller than West Hartford.”

To offset this lost revenue, the state provides Payment in Lieu of Taxes, or PILOT grants, to cities. Several urban mayors said, however, that the state is not fully funding these grants.

Desperate for revenue, cities jack up their mill rates often twice as high as suburbs’. High taxes can drive out middle-income people and businesses, the very taxpayers cities want to keep.

In September 2017, Hartford publicly announced it was considering bankruptcy. The state and city negotiated a bail-out deal, agreeing to pay off the entire principal on Hartford’s general obligation debt, about $534 million, over the next two or three decades. The deal has been strongly criticized by all three gubernatorial candidates.

Consistent grants and aid are a band-aid for the cities’ plight. Stefanowski’s campaign said he would maintain municipal and education grants. Many critics have doubted this is possible, given his biggest campaign promise: to eliminate the income tax, which generates half of all state revenue.

While Lamont would support regional economic development efforts and backed service sharing, particularly school administration, he said regional revenue sharing would lead to “civil war.”

Only Griebel backed regional revenue sharing. Stefanowski moved away from the idea; his campaign said he would “restore local control and put power back in the hands of our municipalities.”

Quality of life

Like schools, crime and transportation, affordable housing is key to attracting and keeping the middle class.

“Connecticut remains one of the most expensive states to live in,” said Mary Donegan, assistant professor-in-residence of urban and community studies at the University of Connecticut. “It makes it really hard for graduates to stay. And when your talent is leaving it makes it really hard for the economy of our cities to work.”

Experts consider housing affordable when individuals spend less than 30 percent of their income on shelter. In Connecticut cities, about 60 percent of people are spending well