Hartford Business Journal

20 Hartford Business Journal • March 21, 2016 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL No good options for city or state T he economic and fiscal storm clouds hanging over the State Capitol have now engulfed the entire city of Hartford. Indeed, the state of permanent fiscal crisis that saturates state government's finances has spread its ugly tentacles to the Capital City, and there appears to be no easy remedies to either problem. The alarm bells sounded by newly minted Hartford Mayor Luke Bronin — who is call- ing for significant spending cuts, city layoffs and potential revenue increases to deal with double-digit deficits for the foreseeable future — are both terrifying and enlightening. Frankly, it's refreshing to hear a politician come clean on Hartford's true short- and long-term fiscal outlook, and the dire straits the city is in. An individual or group of people can't fix a problem until they know the true extent of it. Bronin has made it crystal clear that an estimated $9 million deficit this fiscal year and $32 million deficit next year are only the tip of Hartford's fiscal iceberg. Unfortunately, hard truths inevitably hurt, and the need to raise new revenues — through tax increases or other meth- ods — now seems more likely in the years ahead from both the city and state. While Bronin told WNPR last week that a proper- ty tax increase, particularly on small busi- ness owners, would "risk killing a city," the mayor has already hinted at the need for the city's largest commercial property owners and nonprofits to contribute more. That will make Hartford a tougher sell to businesses. That's unfortunate, particularly as Hartford has been gaining momen- tum in recent years with new companies and residents entering the city, and the pros- pects of UConn's downtown campus opening in 2017. And things could get worse before they get better. Municipalities have largely been spared from budget cuts since Gov. Dannel P. Malloy took office, but top Democratic leaders are now eyeing reductions to city and town aid to plug the state's burgeoning deficit. Bronin knows that a state bailout, even for the Capital City, would be a tough ask. It's likely the state's fiscal problems will increasingly trickle down to municipalities in the years ahead. Now more than ever, Hartford's mayor must bring businesses to the budget-nego- tiating table and allow them to be key players in helping solve the city's problems. Not only is their support crucial in preserving Hartford's tax base, but they have intellectual capital that can bring new ideas to solving age-old municipal finance problems. To his credit, Bronin has shown a willingness to work with the business commu- nity, which has high hopes for the novice mayor. He's even tapped a top private-sector executive — Phoenix Cos. Chief Financial Officer Bonnie Malley — to serve in his administration as chief operating officer. Malley hasn't started yet, but her appointment should bring new perspectives to city hall. The business and nonprofit communities must also be willing partners. If Bronin can articulate a vision and plan for the future that offers short-term pain in exchange for long-term growth and stability it may be the city's only path forward. Bronin also continues to promote the need for regionalism, which we fully support. If Hartford continues to stand alone, its economic disadvantages — including a larger percentage of tax-exempt properties and higher poverty rate, among others — will continue to weigh the city down. Much more needs to be done to knock down the walls between municipalities so that resources can be shared and savings derived. It's an imperative for both the city and the state to manage through these choppy fiscal waters. n RULE OF LAW Spending cap resolution seems unlikely By John Horak W hen I retire I plan to write a book about Connecticut's constitutional spending cap. It will discuss how the cap was intended to restrain spending when it was put in the constitution in 1992, how lawmakers have spent the state to the brink of insol- vency, and how the legislature created a "Spending Cap Com- mission" in Dec. 2015 to fix unresolved legal glitches in the cap. The underlying motifs of law, politics and finance should make for interesting reading, and it will cover several issues. The initial chapters will discuss points made in previous columns I've written on this topic. First, the cap has lingered in legal limbo since 1992 because the legislature has ignored the cap's directive to define (with a 60 percent major- ity) the economic terms necessary to enforce the cap's full implementation. Second, the legislature's abdication of duty has resulted in two dueling attorney general opinions about the cap: a 1993 opinion saying it is enforceable, and a 2015 opinion saying it is not enforceable. Third, our current budget was approved with a vote inconsistent with the 1993 opinion, but consistent with the 2015 opinion. Accordingly, we do not know if our budget is law- ful or not — something that will slowly dawn on bond-rating agencies. In the next chapters I will explain how, as 2015 ended and 2016 began, it became clear that there were two ways to resolve this conundrum: The issues could be litigated and the courts could decide which attorney general opinion is correct and the state would proceed accordingly; or the legislature could fix the glitch by defining the measuring terms with the 60 percent majority — which is where the Spending Cap Commission comes in. The Commission has been created to draft "proposed definitions" of the measuring terms for purposes of "the constitution of the state." The "proposed definitions" would then be taken to the full state House and Senate where a 60 percent majority vote would be necessary to fix the problem once and for all. The bill creating the Commission states that the Com- mission will terminate when it "submits its pro- posed definitions or by Dec. 1, 2016, whichever is later," so at least in theory it could last forever if it takes that long to draft definitions. The Commission could go one of two ways. It could be a success, approving definitions that will win the bipartisan support necessary to achieve a 60 percent majority vote in the House and Sen- ate. This would resolve the legal uncertainty and bring us into compliance with the constitution. On the other hand, the Commission could prove to be a ruse — a device designed to create the illusion that lawmakers take the constitution seri- ously, and to appease voters in an election year — especially the 80 percent who voted to approve the cap in 1992 (which includes me). Unfortunately, all indications are the Com- mission will be a ruse. Sixty-seven percent of the Commission's members will be appointed by the current majority party, and 33 percent by the minority party — so the majority party's appoin- tees will control the drafting of the "proposed definitions," which reduces (perhaps to near zero) the chances that their proposed definitions would ever get enough minority party votes to reach 60 percent in the House and Senate. This lopsided uni-partisan configuration is obvious enough to suggest it is intentional, and it should anger voters and lawmakers regardless of party affiliation. Majorities and minorities will inevitably end up trading plac- es over time; and the wisdom baked into the constitutional cap's 60 percent requirement is the stability inherent in bipartisanship. I understand that politics is a game played with a hard ball. But this is serious business and we need stewards who are able to see beyond the short-term horizons on which they seem fixated. Nevertheless, I want my book to end on a positive note, and to increase the likelihood of that happening, I have two suggestions for the legislature — one is serious and the other is 67 percent serious and 33 percent fanciful. During this legislative session lawmakers should make two operational changes to the Spending Cap Commission. First, its membership should be restruc- tured to include equal numbers from each political party — something that would greatly enhance the likelihood that any proposed defi- nitions they draft would reach the 60 percent majority when taken to the House and Senate. Second, while the lifespan of the Commis- sion can remain as is, I would add a provision stating that if the work is not done by Dec. 1, the Commission would be sequestered with enough food for a week. Of course, for this technique to work, both sides must really want to get a deal done — and I am not sure that is the case in Connecticut. n John M. Horak has practiced law at Reid and Riege P.C. in Hartford since 1980. His opinions are his own. HARTFORDBUSINESS.COM POLL Should Hartford ask the city's largest nonprofits for PILOT contributions? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: What should CT do with online fantasy sports gaming? 12.5% Legalize, don't tax 62.5% Legalize, tax 25.0% Don't legalize John Horak LETTER TO THE EDITOR Response to op-ed from Elin Swanson Katz To the Editor: The response last week from Consumer Counsel Elin Swanson Katz, to an earlier Hartford Business Journal editorial, demonstrates that the continuing evolution of her government broadband proposal is still bad policy. More than a year ago, Ms. Katz proposed build- ing a government-run broadband network without a clear assessment of the costs to taxpayers or an hon- est discussion of the need for such a project. The Office of Consumer Counsel is empowered to protect the interests of consumers, but Katz's propos- als concerning broadband, at this juncture, may only cost taxpayers more money and threaten the quality of their broadband service. Paul R. Cianelli President & CEO New England Cable & Telecommunications Assn., Inc. ▶ ▶ If Hartford continues to stand alone, its economic disadvantages … will continue to weigh the city down.

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