September 7, 2017

Bronin warns of impending Hartford bankruptcy threat

Greg Bordonaro
Greg Bordonaro
Hartford Mayor Luke Bronin explaining his first-ever budget last year. Union contract concessions contained in that first budget have largely not materialized.

The city of Hartford won't be able to meet its financial obligations two months from now, which could mean a municipal bankruptcy filing "in the coming week," Mayor Luke Bronin wrote in an appeal to Gov. Dannel Malloy and legislative leaders on Thursday.

The letter which contains perhaps the most Bronin has publicly said yet about a potential bankruptcy is meant to be a warning shot to state lawmakers who failed to pass a budget on time as they grapple with their own $3.5 billion deficit.

Hartford's deficit, however, is threatening to make the city insolvent in a matter of weeks or months, Bronin said.

In his letter, the second-year Democratic mayor laid out three options for the city and state lawmakers, who he's been lobbying for months to allocate more funds for Hartford. They include:

  • A "just enough" aid solution that achieves short-term liquidity for the city and prevents it from missing debt and/or other payments.

  • Failing to adopt a budget or writing off the city's problems as unsolvable, which would lead to a Ch. 9 bankruptcy filing.

  • Or, a collaborative approach that would involve reimbursing the city more for its non-taxable property and creating a restructuring mechanism for labor contracts.

The mayor, who has been sounding the horn about the city's fiscal condition and last month hired bankruptcy lawyers to help it pursue restructuring options, is clearly hoping for the third option.

The uncertainty over Hartford's future has been exacerbated by the legislature's failure to pass a budget. The state has been operating under executive order since July 1.

"Connecticut would be the first state in the nation to have its capital city go bankrupt," the mayor wrote in his letter. "We want to avoid bankruptcy, if possible and filing for bankruptcy because the state failed to adopt a budget, rather than because we have collectively determined that it is the best way to achieve sustainability, would be a sad commentary on the state's budgetary gridlock."

(Harrisburg, Penn.'s city council filed for bankruptcy in 2011 but a court dismissed it six weeks later because the city's mayor didn't support the filing)

Bronin wants to restructure and settle the city's union contracts through a process other than binding arbitration, which he says is unlikely to result in the savings the city needs.

Even if all unions agreed to the same terms that firefighters agreed to earlier this year, he wrote in his letter, it would only close 10 percent of the city's current fiscal year deficit.

A previous proposal by Gov. Dannel Malloy would have allowed for the city to settle contract disputes through a Municipal Accountability Review Board (MARB).

Bronin wrote Thursday that he supports the creation of a MARB, though doesn't agree with every piece of Malloy's original proposal.

He wrote that the city is willing to take any additional state aid, beyond short-term liquidity support, conditional on the achievement of a long-term sustainable plan for the city.

"There are those who believe that bankruptcy is inevitable. They are wrong," Bronin wrote. "There are those who believe that we should avoid bankruptcy at all costs. They are also wrong."

Success should only be measured by whether the city is "on a path to sustainability and strength over the long-term."

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