In the wake of an agreement by the state to bailout the city of Hartford and relieve it from more than a half-billion dollars of debt, leaders from several municipalities are crying foul, asking where’s their help.
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In the wake of an agreement by the state to bailout the city of Hartford and relieve it from more than a half-billion dollars of debt, leaders from several municipalities are crying foul, asking where's their help.
New Haven and Bridgeport mayors and others are peeved that Hartford is getting more attention and support than their respective cities and towns. While they have a legitimate gripe to some extent, the real concern is the precedent that Hartford's bailout sets.
Few people with a vested interest in the Capital City wanted to see a Hartford bankruptcy. But the magnitude of the rescue — with the state agreeing to pay off about $550 million in debt over two decades — will give rise to future cash-strapped cities and towns expecting a similar bailout.
Moral hazard was thought by some to be a contributing factor to the 2008 financial crisis. The notion was that certain large financial institutions took on more risk than they knew they could handle because they thought regulators wouldn't allow them to fail. I'm not sure I buy into that argument 100 percent, but once the federal government bailed out Wall Street firms at the peak of the crisis, the notion that some institutions were too big to fail was cemented.
Hartford has clearly been deemed too big to fail, but at what point and to what extent do we hold municipalities responsible for their own financial mismanagement?
Republicans and even some Democrats are questioning the scope of Hartford's bailout. It's not clear to me that lawmakers during last October's budget agreement OK'd a full absolution of Hartford's debt. It seems extreme.
More concerning is that the financial rescue doesn't address some of the fundamental problems that plague the city, including an exorbitant commercial tax rate, an exceedingly high percentage of tax-exempt property, and a population steeped in poverty.
Mayor Luke Bronin himself called for a more regional approach to municipal governance, yet nothing of the sort is part of the Hartford bailout.
The debt relief will certainly put the city on a better financial footing, and a state bailout may be a better option than bankruptcy. But what leads us to believe that the city's financial woes won't return in the future?
To be fair, the city of Hartford has made strides under Bronin's leadership. He's cut the cost of city government, renegotiated some union contracts and been the chief cheerleader of the bailout plan.
And there are some significant strings attached to the financial rescue. The city is under state oversight; its spending will be scrutinized for years. The city is also restricted from taking on new debt without the state's permission.
But many fundamental problems still plague Hartford and they won't be solved by a government handout.
Malloy cements pro-Hartford legacy
With the financial bailout of the city of Hartford near completion, Gov. Dannel P. Malloy has cemented his legacy as Hartford's white knight.
Whether you agree or disagree with the scope of Hartford's financial rescue, it can't be denied that Malloy's leadership has left the city a better place.
It started with the creation of the Capital Region Development Authority, which has played a key role in developing hundreds of new apartment units downtown that have enlivened the city. Malloy was also a major supporter of bringing UConn and its hockey team downtown and he spent significant political capital urging greater investment in the aging and dilapidated XL Center.
He and his economic development team also worked behind the scenes to encourage more employers to come downtown. His crowning achievement was Indian IT firm Infosys' recent announcement that it was opening a downtown tech center bringing 1,000 jobs to Hartford.
The city's problems are far from over, but Malloy's support for Hartford and his leadership in getting lawmakers and the state Bond Commission to pour hundreds of millions of dollars into the city for economic development and other purposes has given Hartford a fighting chance for future prosperity.
