Hartford's Budget Shortfall Worsens; City Seeks Statewide and Regional Solutions

 Hartford's Budget Shortfall Worsens; City Seeks Statewide and Regional Solutions

Hartford Courant, Sept. 16, 20156

By Jenna Carlesso

Hartford's financial problems are so dire the city could ask the state to advance it millions of dollars to help pay its bills before year's end, Mayor Luke Bronin said Thursday.

Bronin outlined the city's fiscal troubles for a state panel, asking the group to launch a review of Hartford's financial practices that could spur legislative reform. The municipal finance advisory commission, an eight-member group appointed by the governor, did not make a decision Thursday. With rising debt service and pension payments, and fewer one-time revenue sources. Hartford could run out of money as early as December, city records show. Projections prepared by Hartford's budget office show this year's shortfall has ballooned to $22.6 million, up from $16.5 million. The deficit is linked to employee concessions that have not yet materialized, a $4.6 million legal settlement and $1.4 million in debt service for Dunkin' Donuts Park.

A judge last month ordered Hartford to pay more than $6 million to hundreds of families displaced by fires or forced out by unlivable conditions, saying city officials failed to properly compensate them. Hartford would have to pay $4.6 million of that this fiscal year. The city has appealed the decision. 

City leaders cautioned that the estimates are fluid, and the numbers could change if Hartford wins its appeal or if the baseball stadium is completed before the start of the 2017 season, reducing contractual revenues. If the city doesn't meet its target for employee givebacks, next year's deficit could grow to more than $50 million, Bronin said Thursday.

The mayor is seeking legislative reform to provide relief to Hartford and other Connecticut cities, which have long relied on property taxes to fund crucial services. He has suggested a bump in the state sales tax or the creation of a regional tax to help ease the burden on municipalities. He has also floated the idea of shared services with neighboring communities.

"I don't think we should be looking to just pile more tax burdens on those who are already taxed at a high rate, and who are important to keep the city alive and thriving," Bronin said. "So I would much rather see us, as a state and as a region, adopt some sensible policies and a sensible funding structure that helps to raise revenue on a regional or statewide basis so you can invest in the core city. By doing that, you're going to help drive growth throughout the region and throughout the state."

more than 50 percent tax exempt back to top

More than half of Hartford's properties, including its many nonprofits, hospitals, colleges and state government facilities, are tax-exempt. "When you've got less taxable property than Glastonbury or Manchester or West Hartford, that's a system that's broken," Bronin said. "We need to fix it."

Records he submitted to the state panel Thursday show the city will face cash flow issues in December, March and June. The estimates show Hartford will run $18.5 million in the red before year's end.

Bronin said the city is required to make payments to the board of education each month but is reimbursed by the state in only three installments – in October, January and April – a cycle that has strained Hartford at a time when its rainy day fund is decimated and one-time revenue sources have dried up.

"The city will face real cash flow problems based on our current estimates," the mayor said. "In June, we're projected to exhaust available funds. Because of the timing of education cost-sharing reimbursements from the state, we may face some real cash flow challenges as early as December and March." Bronin said the city could ask the state for an advance on its education cost-sharing payments in December. "I've already raised the issue with officials at the state, and I hope to work with them over the next couple of months as that challenge approaches," he said.

The city may try to get some of its January payment early, though it's unclear what type of approval that would require. "Governor [Dannel] Malloy is committed to helping Hartford – the state's capital – thrive and grow, as the state provides Hartford with more than a quarter-billion dollars a year in municipal aid and has supported nearly 100 Hartford-based businesses" via the small business express program, said Chris McClure, a spokesman for Malloy. "We will review means to assist the city of Hartford when presented on the merits and feasibility."

Tom Hamilton, chairman of the municipal finance advisory commission, said Thursday that the panel could probe the city's budget books and provide recommendations, but the broader issue of structural reform falls on the legislature. "The larger issues that you're talking about are outside the purview of this commission," he said. "But we can hopefully at least provide a little bit of guidance or suggestions."

Since he took office last January, Bronin has talked extensively about the city's financial problems. He has mentioned the possibility of regionalism in several public talks, and implored other municipal leaders to join him in pressing for overhaul of the tax structure.

Hartford adopted a $552.9 million budget for this year that relies on employee concessions, the sale of city-owned Batterson Park, and the draining of Hartford's rainy day fund – one-time fixes that the mayor said he had hoped to avoid. Bronin also laid off 40 workers and slashed an additional 60 positions.

"Our commitment is to do everything we can from city hall in Hartford to get our house in order, to run government responsibly and efficiently, to treat taxpayer dollars with respect," Bronin said Thursday. "At the same time, we currently do not see a way that the city of Hartford can overcome projected deficits on our own without some significant structural reforms at the state or regional level."