Hartford appears to have escaped the imminent risk of bankruptcy, at least temporarily, with the passage of a state budget. But one ratings agency says it’s what happens next that really counts.
The state’s capital city is facing at least a $40 million budget hole this fiscal year -- and those deficits only grow in years to come because of an unsustainable amount of debt.
Mayor Luke Bronin told WNPR he’s pleased with the new opportunities he now has.
"A big part of what the state budget does is creating this authority for the state to partner with us, in restructuring the debt in a responsible way," he said. "So we can deal with this mountain of debt we’re walking into without just recreating the problem for some future mayor."
The partnership allows a state board to weigh in on labor contracts and city borrowing. It also allows the state to guarantee loans made under any restructuring deal -- meaning the city will be able to borrow at much more advantageous rates than its own junk status.
But Nick Lehman of Moody’s Investors Service cautions that the debt burden is only one piece of the puzzle.
"It remains unclear whether a debt restructuring alone solves the structural imbalance over the long term for the city," he said. "So are there other stakeholders that they are going to pursue?"
In other words, can the city cut costs any further? Can it wring more wage and benefit concessions from its employees? And can it generate more revenue - perhaps from economic development?
Bronin won’t give away too much about his strategy yet, but he believes that last piece is now more attainable.
“We need to grow economically, we need to increase property values, but the first key to growth is sustainability and predictability," he said. "You need to be out from under the cloud of crisis.”
Hartford will work with a newly-created Municipal Accountability Review Board at the state to map its steps to recovery. It has until the end of June to figure out how to close the current year’s projected deficit.
The mayor has pledged that plan won’t include increasing taxes.