The newly minted state budget provides the fiscally strapped city of Hartford with the means to pursue a recovery plan and avoid bankruptcy in the short term, a Moody’s Investor Service analyst said Wednesday, but long-term risks remain.
In a brief statement, Nick Lehman, Moody’s lead analyst who covers the city of Hartford said: “With the new Connecticut budget signed into law, the city of Hartford now appears to have sufficient funding to remove the immediate threat of bankruptcy or an imminent default.”
Lehman added, however, that the Capital City “continues to have very high credit risk with significant long-term structural issues that need to be addressed. The state aid provides the city time to pursue a financial recovery plan, which will likely include some type of debt restructuring, possibly with a loss to bondholders.”
In a statement issued after Gov. Dannel P. Malloy signed the bulk of the bipartisan spending plan on Tuesday, Hartford Mayor Luke Bronn cautioned that the city is now in better shape than it was but not out of the woods yet.
Bronin, who has consistently described the city’s need this year for about $40 million to close its budget deficit, said the tools in the budget that can help lead the city toward sustained fiscal health “outside of Chapter 9” include a municipal accountability board and the capacity for the state to partner with the city on debt assistance.
The catch is that all stakeholders must be “prepared to be a real part of the solution,” he said in a statement.
“We will now work on partnering to use those tools, and we will stay focused on true, long-term sustainability – not just buying time,” Bronin said.
