With no state budget in place, Connecticut's capital city is on track to run out of money in 60 days.
Hartford Mayor Luke Bronin sent a letter to lawmakers and Gov. Dannel Malloy on Thursday highlighting the urgency of the situation.
"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," Bronin wrote. "If there is no budget or additional state funding in place at that time, we anticipate seeking authority to file Chapter 9 [bankruptcy]."
The issue was a topic of an I-Team investigation that Channel 3 aired last November.
Bronin said the city has already exhausted its options of fund balance, large numbers of layoffs, and service reductions.
He said Hartford cannot cut its way out of the crisis.
He cited Moody's Investors Services report from last month that said any further cut eliminate rather than reducing core services.
Bronin said the state has three options.
First, it could give Hartford just enough assistance to avoid short-term liquidity problems.
Second, it could write off the city's problems as "unsolvable," which would require a Chapter 9 filing in the coming weeks. Bronin said if that's the case, Connecticut would be the first state in the nation to have its capital city go bankrupt.
Permission would need to come from Gov. Malloy as required by state law. Then the city would have to prove in court that they are out of money and unable to pay bills.
Bronin said he hopes that is the last option, saying "We have a capital city built on the tax base of a suburb."
Fifty percent of the property in Hartford is tax exempt. The current shortfall is about $50 million.
"We are asking the state to at a minimum fully fund the payments in lieu of taxes formula that has been on the state books for many many years that has been dramatically underfunded.," Bronin said.
Lastly, the state could "embrace a farsighted, collaborative approach" in a partnership with Hartford to help put the city on a sustainable path.
This path would include fairly reimbursing the city for what Bronin called a "disproportionate share of non-taxable property." It would also help Hartford create a path for fair labor contracts that it can afford and insist that bondholders and other stakeholders participate in the solution.
Bronin said the last option is the wisest and most responsible course of action.
A statement from Gov. Dannel Malloy was issued by spokesperson Meg Green, saying “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.”
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