January 19, 2017

Study: Hartford needs a bailout or bankruptcy

HBJ Photo | Matt Pilon
HBJ Photo | Matt Pilon
In 2017, Mayor Luke Bronin will be at the state legislature asking for financial support to aid the struggling Capital City.

Hartford is the "most broken" of Connecticut's four challenged cities and will likely need a state bailout or bankruptcy protection to deal with its fiscal crisis, according to a new study published by the Manhattan Institute and the conservative Yankee Institute for Public Policy.

Manhattan Institute Senior Fellow Stephen D. Eide diagnoses the ills facing Hartford, Bridgeport, New Haven and Waterbury, noting that all four have fewer city workers than a decade ago; higher mill rates; no savings; and concentrated poverty.

"Taxpayers are paying more and getting less," Eide says in the study.

Hartford's debt service payments will nearly double between 2016 and 2018, and then increase by a third again by 2021. Hartford's debt per capita is up 78 percent since 2006. Eide predicts the city will need either a state bailout or bankruptcy protection.

If Hartford declares bankruptcy, a condition the governor must authorize, investors could demand higher interest payments from governments across the state, the study states.

Along with Hartford, the cities under scrutiny are home to half a million people or 14 percent of Connecticut's population. Poverty is rising while population is falling. Since 1970, the cities lost nearly 48,000 residents, while the number of people in poverty grew by 55,000. That's a 72 percent increase in poverty and a 8.5 percent decline in population, the study found.

Eide also recommends ways to address Connecticut's big city challenges, including labor and spending reforms, not just raising revenue.

The average Connecticut municipality gets 22 percent of its revenue from the state. The broken cities get 47 percent, he pointed out.

If Hartford and New Haven pensions costs had risen in line with taxes, they would have millions more to spend each year: $26.3 million for Hartford; $10.5 million for New Haven. Eide discovered that 40 percent of Waterbury taxes pay for retirement liabilities.

"Robust staffing levels alone do not ensure a competent municipal government. But it takes an extremely talented manager to reduce crime and improve test scores while also slashing the budget," Eide says in the study.

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