Hartford Business Journal

12 Hartford Business Journal • June 20, 2016 www.HartfordBusiness.com New regional revenue sources, along with options other than a costly bankruptcy filing, which would primarily benefit the city by allow- ing it to crack open collectively bargained pacts with its city workers, must be identified, Bro- nin says. Several city-employee unions say they have shared a list of their ideas with city hall. But the mayor, who is nearly six months into his elected tenure as chief of Connecti- cut's Capital City and second largest by popu- lation, said Hartford's options for righting its fiscal ship are extremely limited. Hartford sits as the state's most property-tax bur- dened municipality, with a mill rate of $74.29 for every $1,000 of assessed property value. Moreover, the city has begun layoffs of city workers, Bronin said, particularly those whose jobs are not directly tied to public safety, such as police and fire, and vital city services, such as public health-safety checks and certain social services. Even marshalling every nickel in savings from layoffs, operating cutbacks and renegoti- ating wage pacts with city-worker unions, Hart- ford still faces a minimum $48 million budget deficit for the ensuing fiscal year, Bronin says. Backed against that wall, the city is weigh- ing any or all of its options for solving its financial misfortunes, saving a bankruptcy filing as its final contingency, he said. "There's a limit to how much you can cut,'' the mayor said, "and we have long ago passed the ability of how much more you can tax. … We are not afraid to do difficult things.'' The biggest challenge the city faces, Bro- nin said, is curbing its reliance on property taxes to run the city and provide services to residents and businesses. Among the potential regional solutions, Bronin said, "I'm talking about many differ- ent types of regional services sharing.'' It, too, may mean, he said, the city seeks new revenue sources or shares in some existing ones, such as the state sales or income taxes, or per- haps even establishing a regional property tax. But any of those options would require legis- lative approval, a tall task considering the state's own financial woes. The General Assembly did vote earlier this year to allow the city to keep proceeds from the state's 10 percent admissions tax charged to Dunkin' Donuts Park ticket buy- ers. However, the city has yet to benefit from the measure due to the ballpark's delayed opening. Bronin said that aside from input from his aides and fellow city leaders, he also has reached out to the city's employee unions, as well as to Hartford's business community, and to his fellow mayors and first selectmen in neighboring suburbs. "We can't solve this problem on our own,'' he said. "There is a growing recognition that if Connecticut and the capital region are going to compete with metro centers around the U.S., we have to position the heart of the region as a strong, growing, vibrant commer- cial and cultural center.'' Hartford's conservative think-tank, The Yankee Institute, was among the first to open- ly explore the potential impact of a Hartford bankruptcy filing in a May 26 blog post. It notes that the city's financial woes underscore the shortcomings of binding arbitration in collec- tive bargaining and should not be overlooked. "It's really important for everyone across the state to pay more attention to what's happening in Hartford, especially because taxpayers who live outside of Hartford fund about half the city's budget," Yankee Presi- dent Carol Platt Liebau said via email. Close calls One of the nation's richest states, Con- necticut only once had one of its cities file for bankruptcy — which was later withdrawn — although several have come close. Nationwide, cities ranging from Detroit, Mich., to a pair of California communities — Stockton and Vallejo — to tiny Central Falls, R.I., have filed for, and emerged from, Chapter 9 in the past decade. Connecticut's closest call occurred in 1991, when then-struggling Bridgeport shocked the state with its filing. However, reluctant state leaders eventually allowed that city to tap into a $15 million "lock box'' of funds earmarked for the city, prompting dismissal of the filing. Later, Connecticut lawmakers enacted the law mandating the governor's approval for future municipal bankruptcy filings. Next, in the early '90s, came oversight of the shoreline city of West Haven and the state receivership of Griswold's Jewett City bor- ough, and, in 2001, oversight of Waterbury. All four oversight boards eventually were dis- solved after satisfying specific milestones, including creating a sustainable finance plan. Waterbury, in particular, emerged on better financial footing, though some observers say its fiscal affairs remain tenuous. "Waterbury is still in a very difficult finan- cial position,'' said veteran city firefighter John Schultz, who is president of the city's 225-member firefighters' union Local 1339. Even with the board's oversight, it was antici- pated to take 20 years for Waterbury to make up for lost financial ground, Schultz said. Waterbury firefighters, he said, openly opposed an oversight board, and, later, when the board began negotiating labor pacts as they came due, their union wasn't treated as fairly as their peer bargaining units. However, with better fiscal controls in place and charter changes, his city is much better off today than it was a decade earlier, Schultz said. One such charter change decreed the city's pension contributions and assets benefit only retirees, and not be used, as they were in years leading up to Waterbury's crisis, to pave streets and fund other city projects, especially during election years, he said. Noting that Hartford's woes are shaded more differently than Waterbury's, Schultz said it would behoove Hartford's city bargaining units to work collectively with the city to craft ways to close current and future deficits. He also sug- gests both sides first undertake a thorough audit to get a clearer picture of the city's finances. "I think there's a lot more to be heard there,'' Schultz said. Collaboration is key Bronin faced fierce resistance from unions, nonprofits and others earlier this year on his failed state legislative proposal to create a simi- lar financial sustainability commission for the city of Hartford. The commission would have given an oversight board made up of various constituents, including two business representa- tives and one union representative, among oth- ers, final say over new labor contracts and the ability to negotiate pension and health benefits. Hartford police Sgt. Richard Holton III is president of their union local. Holton said his 402 members want to help the city dig out of its financial hole, even presenting the mayor a list of their ideas for generating revenue beyond property taxes. But Bronin's call for salary/benefit cuts of $10,000 to $12,000 per officer annually are unacceptable, he said. The police and other city unions, he said, prefer the city exhaust all available revenue options before it weighs bankruptcy. "But at this point in time,'' Holton said, "I don't think that's happened yet.'' The American Federation of State, County and Municipal Employees (AFSCME), repre- senting about 750 city and school-system workers, says, it too, has had talks with Bro- nin on mutually beneficial solutions to the city's woes. Just recently, about 200 city cus- todians agreed to a new pact that lacks raises, said Council 4 AFSCME Executive Director Sal Luciano. Also underway are negotiations for a new contract covering some 500 city workers, among them dispatchers, public works staff and librarians, Luciano said. The city, too, has discussed with its bar- gaining units, he said, the possibility of con- solidating disparate health plans into a single one to save several million dollars annually. Hartford's business community, too, insists on having a say in any resolution, according to MetroHartford Alliance CEO Oz Griebel. Indeed, a Hartford bankruptcy filing alone won't guarantee all the city's financial problems are behind it, Griebel said. More important, says the chief of Hartford's regional chamber of commerce, many corporate leaders and others he has polled about a potential city bankruptcy insist any workout must involve collaboration from all key stakeholders — city leaders, work- ers and residential and corporate taxpayers. Bronin agrees. "We want them at the table as we try to design a regional solution,'' he said. Still, Hartford's persistent fiscal woes have it staring down the barrel of a potential Chapter 9 municipal bankruptcy. Henzy, the Hartford bankruptcy lawyer, was a law clerk in Bridgeport bankruptcy court in 1991 when that city filed. His takeaway from Bridgeport's experience is that there are limits to a municipal bankruptcy that also rais- es enough questions and future uncertainty to truly render it the door of last resort. Along with questions, Henzy said, as to the potential impact of a bankruptcy filing for Hartford's business, cultural and political image, not to mention the psyche of its residen- tial, civic and corporate citizens, are others. "What do you get out of it in the end?'' Henzy said. "Are you on the path to fiscal sustainability?'' n Unions, business sector must pitch in from page 1 Other ways Hartford could get paid According to Hartford's police and other unions, they have submitted — or at least support — to Mayor Luke Bronin a list of revenue-generating ideas. Among them: • Road-use fees on event attendees to the XL Center, Bushnell Theater and Xfin- ity Music Hall in the city's North Meadows. According to police union head Sgt. Rich- ard Holton III, approximately 220,000 visitors a year travel city streets to attend concerts, forums and other entertain- ment events at those venues. A $5 surcharge, say, on each ticket sold to attend would reimburse the city millions for the cost of overtime and responses by police, fire and other safety services on event nights. • 9-1-1 fee for renters. Akin to a fee imposed on New York City renters, a $3 to $5 per month surcharge on landlords for each living unit they lease to tenants. This fee would remit millions to the city annu- ally for dweller's access to emergency and other services. • City-run towing. Put under the city's umbrella this currently outsourced service. With some 9,700 vehicles towed last year for an average bill of $93 apiece, that would generate nearly $1 million annually for city coffers. Of course, the city would need tow trucks and ancillary equipment and support systems. City residents could be hired as drivers and support staff. • Enforce its existing ordinance allowing the city to tax multi-use dwellings as busi- nesses rather than residences, especially when the owners don't live there. Hartford has a number of converted-apartments-to-condos whose owners lease them out but that are inad- equately taxed based on this use. • Tax college dorms/apartments. Trinity College has built new apartments on its campus for which it is exempt from taxes despite the units not being used pri- marily for learning. — Gregory Seay Sgt. Rich Holton, head, Hartford police union Only one Connecticut city has ever declared bankruptcy, a filing that was short-lived. Hartford's mayor says the city is doing all it can to avoid having to do so. P H O T O | H B J F I L E

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