Hartford Leaders Warn of Possible Bankruptcy Filing Without a State Budget

The city of Hartford could have to file for bankruptcy if the state fails to pass a budget or doesn't provide additional state funding, according to the mayor, treasurer, and president of the court of common council, and they are calling on the state to step in and help get the city on the right path.

Mayor Luke Bronin, Treasurer Adam Cloud and Court of Common Council President Thomas Clarke II wrote a letter to the governor and state legislative leaders Thursday alerting them to the dire financial situation the capital city is in.

They said the city will not be able to meet its financial obligations in around 60 days if there is no state budget.

“For the past year, we have highlighted the urgency of Hartford’s fiscal crisis. The time has come to decide, together, what future we want for our Capital City. If the State fails to enact a budget and continues to operate under the Governor’s current executive order, the City of Hartford will be unable to meet its financial obligations in approximately sixty days. If there is no budget or additional State funding in place at that time, we anticipate seeking authority to file Chapter 9,” the city leaders wrote.

The Hartford officials said that over the last 18 months they have already done what other cities and towns are thinking about doing, including using their fund balance, enacting a large number of layoffs and cutting services.

They added that they cannot make cuts to get out of the fiscal crisis and they cannot tax their way out.

“Our property taxes on commercial property are the highest in the State and may be the highest in the nation. With a mill rate of 74.29, our long-term growth and sustainability depends on reducing, not raising, the property tax,” city leaders wrote.

The mayor, treasurer, and president of the court of common council laid out what they consider to be options fior the state to help the city.

“Connecticut would be the first State in the nation to have its Capital City go bankrupt. We want to avoid bankruptcy, if possible — and filing for bankruptcy because the State has 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. That said, a well-planned bankruptcy is a tool that can be used to address long-term liabilities like debt and pension obligations. If we are unable to find an alternative path to sustainability together, then we should all be prepared to use that tool rather than condemn Hartford and the Greater Hartford region to a future of decline,” Bronin, Cloud and Clarke wrote.

Meg Green, a spokesperson for Gov. Dannel Malloy released a statement Thursday afternoon.

“We could not agree more with the urgency of the situation, particularly for the City of Hartford. With rising fixed costs, eroding revenues, and limited powers, executive authority does not provide flexibility for allotting funds in the absence of a budget passed by the General Assembly. Inaction was not an option and we needed to sharply reduce spending in many areas – including spending that we all agree is important and worthwhile, such as municipal aid. We recognize this is difficult for the municipalities as many communities will face cash shortfalls if we continue forward without a state budget. We continue to hope to have a full budget adopted by October to mitigate the harm and avoid having towns or cities go through reorganization,” Green said in an emailed statement.

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