STUMP » Articles » How About Turning Around Hartford? » 11 May 2017, 11:54

Well, this is pleasant.

Hartford Moves Closer to Bankruptcy, Soliciting Proposals From Law Firms

City leaders have taken a step toward bankruptcy, soliciting proposals from law firms that specialize in Chapter 9, which protects financially strapped municipalities.

The city is reviewing several firms and could hire an attorney as early as this week, sources with knowledge of the plans said.

Mayor Luke Bronin has hinted for months that Hartford could file for bankruptcy, and said during his budget release in April that he was “not in a position to rule anything out.”

He confirmed Tuesday that the city was looking at firms.

“We have not engaged bankruptcy counsel, but we have had initial conversations with firms that have experience in Chapter 9 and municipal restructuring,” Bronin said. “Given the uncertainty of the state budget process and the depth of the state budget crisis, it shouldn’t surprise anyone that we might engage counsel in the near future.”

Hartford faces a $65 million deficit next year and a $14 million shortfall this year. Bronin has proposed cuts and concessions from the unions, but is still seeking $40 million in additional state aid to close next year’s budget gap. The city resorted to short-term borrowing to cover costs such as payroll payments this year.

Oh dear lord. Borrowing money for operating expenses.

Where have I heard that one before.

As I mentioned before, I work in Hartford, CT, and while I’m not part of the handful of billionaires that CT depends upon for so much of its revenue, it definitely gets its thousands out of me each year. I spend most of my weekdays in Hartford, and its roads are bad enough before any bankruptcy.

WHERE ARE THE RICH PEOPLE?

Back to the article:

Hartford wouldn’t be the first city in Connecticut to seek Chapter 9 protection. Bridgeport filed for bankruptcy in 1991, but a federal judge dismissed the petition, saying the city was capable of paying its bills.

So here’s the deal. Lots of finance-related companies in Hartford. Lots of rich(ish) people working here.

But they don’t live in Hartford. If you know the area, you may know there are quite a few rich(ish) people in West Hartford, which is only a few miles from downtown Hartford. But West Hartford is a separate town.

Let’s compare and contrast:

Population:
West Hartford: 63,268
Hartford: 124,705

2015 estimated median household income:
West Hartford: $90,777
Hartford: $34,240

2015 estimated per capita income:
West Hartford: $50,991
Hartford: $18,525

Percentage of residents in poverty:
West Hartford: 8%
Hartford: 28%

Racial composition:

Reminds one of Detroit vs. its suburbs and Chicago vs. its suburbs, no?

LIFELINE FROM THE STATE?

Well, here’s a problem.

The article talks about seeking help from the state. Let’s go back to the article:

Facing a $65 million deficit next year and a $14 million shortfall this year, …

Okay. From an article in my last post about CT finances:

It means the current budget year, which ends in just two months, is now seriously in the red and next year’s deficit has ballooned to $2.2 billion.

The state is trying to push off pension contributions to the teachers fund to municipalities, and they’re getting threatened lawsuits in return.

To be sure, a few tens of millions of dollars ain’t nothing compared to the billions lacking in the state budget. Just a few percentage points! What could it hurt?

I don’t think that’s going to be a winning argument. Hartford isn’t the only town in CT hurting (and a lot of the hurt in other towns is related to pensions…not sure that’s the case with Hartford.) It is the state capital, so the legislature has some direct interest in making sure the town doesn’t fall around them.

But this ain’t going to be ending well. One can see why Malloy has no interest in running again. Having to deal with this mess is going to be very nasty.

UPDATE: Mish links and comments about need for towns in Illinois to declare bankruptcy, too

Compilation of Connecticut posts