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Legislative Leaders Balk At Hartford Bailout, Promise To Reduce Other Assistance

by | Mar 29, 2018 11:30am () Comments | Commenting has expired | Share
Posted to: State Budget, State Capitol, Wall Street, Hartford

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HARTFORD, CT — Republican and Democratic legislative leaders wrote the Office of Policy and Management and state Treasurer Denise Nappier Wednesday to let them know it was never their intention to pay off nearly $550 million in Hartford’s bonded debt.

However, by the time state officials received the letters, the agreement between the state and the city of Hartford was inked.

“It was not the explicit understanding in our budget negotiations that Connecticut would assume the long term payment of Hartford’s debt,” Senate President Martin Looney and Senate Majority Leader Bob Duff said in a Wednesday letter to OPM Secretary Ben Barnes and Nappier. “Let us be clear: any future debt service payments agreed to by the State of Connecticut for the City of Hartford will be taken into consideration when deciding the total municipal aid for the City of Hartford.” 

Republican legislative leaders made the reduction of other municipal aid to the city explicit in their letter too.

“We want to make it clear that we intend to reduce Hartford’s operating municipal aid to ensure that the state is holding true to its commitment in the bipartisan state budget by only providing the $40 million agreed to,” Senate Republican President Len Fasano and House Minority Leader Themis Klarides wrote in their letter to Barnes and Nappier.

They said it appears the state will be irrevocably bound to pay as much as $56.3 million in direct debt service payments and the pledged amount in fiscal year 2019 is $48.6 million. “This is $8.6 million more than was appropriated for said assistance by the General Assembly,” Republican leaders pointed out.

Chris McClure, a spokesman for the Office of Policy and Management, reminded Republican legislators that the budget deal was a bipartisan one and that the governor’s office was not in the room when it was inked.

“If Sen. Fasano and Rep. Klarides don’t like the terms of Hartford’s financial assistance agreement, they need look no further than the closest mirror,” McClure said. “Both Republican leaders negotiated and passed the biennial budget that included this authorization, and they did it with the Malloy administration out of the room. The deal that has now been structured and signed is fully within the statutory outline of the bipartisan budget crafted by Senator Fasano and Rep. Klarides, a position that is supported by legal counsel from not just the Office of Policy and Management, but also by outside counsel retained by the Treasurer’s Office. This is just one more example of Republican leadership running away from the budget they passed.”

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Last September, Hartford Mayor Luke Bronin and city leadership sent a letter to state officials explicitly warning against giving Hartford “just enough additional assistance to avoid short-term liquidity problems.”  Bronin said choosing that path “would avoid hard decisions or embarrassing outcomes for now,” but would “lead to decline, future fiscal crisis, and to continuing insolvency.”

Bronin said legislative leaders from both parties were fully briefed on the proposed state assistance and what the city was doing to reduce its spending.

“The state’s assistance came only after we made deep cuts, negotiated dramatic labor concessions, partnered with our biggest companies, and subjected the city of Hartford to intense and ongoing oversight,” Bronin said. “If Republican leaders regret the long-term partnership they embraced last fall, they should have the courage to call for our Capital City to file bankruptcy, because that’s the only responsible long-term alternative to the partnership they supported last fall.”

House Majority Leader Matt Ritter, D-Hartford, said Wednesday that he was never going to vote for a budget that would have allowed the city of Hartford to go bankrupt and was never going to vote for a budget that allowed the city to default on its debt.

He said the debt service payment over 20 years is nothing compared to what Hartford is expected to receive in state aid over the next 20 years. He said it’s less than 10 percent of what the state is expected to give to Hartford over the next two decades.

“It’s de minimus,” Ritter said.

He said when Jewett City, Bridgeport and Waterbury were on the verge of bankruptcy the state didn’t throw them under the bus and tell them they’re on their own. He said the state backed them up.

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