Hartford Warns Lawmakers And Malloy of Bankruptcy
HARTFORD, CT — Hartford Mayor Luke Bronin has told legislative leaders and Gov. Dannel P. Malloy that the city will file for Chapter 9 bankruptcy protection if there is no state budget in 60 days.
In the Thursday letter to lawmakers and Malloy, Bronin said, “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.”
He said the “extraordinary measures” other towns are contemplating in response to the state budget stalemate — such as dipping into reserves or laying off employees — are measures Hartford has already taken.
Hartford has already hired an international law firm, Greenberg Traurig, that specializes in restructuring debt. As such, and within the same time frame, Wall Street has downgraded the city’s bonds to “junk” status.
“The City of Hartford’s debt burden is unmanageable,” Bronin said in the letter. “By FY 2021, Hartford’s debt service payments will be $61 million, or roughly 20 percent of our current non-education expenditures — even if we do not borrow another dollar.”
While the situation is bad for the residents in Hartford, Bronin also warned how seeking bankruptcy protection would look for Connecticut.
“Connecticut would be the first State in the nation to have its Capital City go bankrupt,” Bronin said. “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.”
Bronin and the city of Hartford would need Malloy’s permission to file for bankruptcy. The last Connecticut city to seek bankruptcy protection was Bridgeport in 1991. A federal judge denied the city’s petition.
“There are those who believe 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. We should work hard, together with all our stakeholders, to avoid bankruptcy. But we should measure success in only one way: by whether we are on a path to sustainability and strength over the long-term.”
The letter was also signed by Hartford Treasurer Adam Cloud and Council President TJ Clarke II.