HARTFORD, Conn. – Luke Bronin ran for Hartford mayor last year because he didn't like what he saw in Connecticut's capital city.
"When I got here, I looked under the hood and it was worse than I had imagined," he said during a City Hall interview.
Bronin, a Democrat and the former chief counsel to Gov. Dannel Malloy, has spent much of his first year in office fighting fires. They include debt-service spikes, two four-notch downgrades from bond rating agencies, union pushback over a doomsday budget, unrealized labor concessions and a minor-league ballpark funding fiasco.
The city could go broke soon, though Bronin has said repeatedly that bankruptcy would not be good for the city or the state. The state's own financial landscape, meanwhile, is ugly.
"Shades of Harrisburg," said Alan Schankel, managing director of Janney Capital Markets in Philadelphia. The city council in Pennsylvania's capital filed for bankruptcy in 2011, though a federal judge nullified the Chapter 9 petition.
Bronin has called for a state oversight panel that he himself would oversee, and is pushing the state legislature for regional funding solutions that may include shared services and a commuter tax.
In a state where property taxes are the dominant source of local revenue, some small suburbs have larger tax bases than 125,000-population Hartford, where more than half the property is not taxable because of government or nonprofit ownership, Bronin said.
"The system is broken," he said. "Hartford has less taxable property than the cities and towns around it. That's the reality. The vitality of the region depends upon its capital city and we don't have enough of a tax base to provide adequate essential services."
Moody's Investors Service on Oct. 7 lowered its general obligation bond rating for the city to junk, four notches from to Ba2 from Baa1. The move affects roughly $550 million of debt. Two weeks earlier, S&P Global Ratings knocked Hartford four levels to BBB from A-plus, keeping it on the lower rungs of investment grade.
"Hartford's bond ratings have been under pressure for years," said Richard Larkin, director of credit analysis for Stoever Glass & Co. Moody's in 2010 had rated city GOs as high as Aa3. S&P had Hartford AA-minus until March.
The city's debt has spiraled through increased borrowing and refinancings under Bronin's predecessor, Pedro Segarra. By 2018, debt service could nearly double to about $46 million, according to city officials.
Bronin also inherited the city's minor league baseball mess.
The new ballpark the city built to lure a Class AA Eastern League team from nearby New Britain not only wasn't ready for opening day, but did not open at all for the 2016 season, forcing the Hartford Yard Goats to play their entire season away from home.
Surety provider Arch Insurance Co. agreed in mid-October to oversee the ballpark's completion, with 2017 opening day the target.
S&P, concurrent with its downgrade of the city, lowered its rating on the Hartford Stadium Authority's lease revenue bonds to fund Dunkin' Donuts Park from A to BBB-minus, the last notch above junk.
Bronin's proposals for outside assistance, which the General Assembly expects to consider in January, include a regional tax and the lessening of city reliance on the property tax.
Regionalism, said Bronin, could range from tax options to sharing ideas and services. That's easier said than done, given the multigenerational city-suburban divide in the Hartford area and rampant parochialism among Connecticut's 169 municipalities.
"Regional solutions involve a lot of difficulty. It's even difficult to me," he said. "But we start by acknowledging a fact that the city and the region are economically integrated. We depend upon one another.
"If you were building a state today, you wouldn't do it that way. We can't afford to do it the way we do it now," he said. "Home rule is a long and proud New England tradition, but as the state faces increased financial pressure, it's time for us to think differently."
The Hartford region has never fully embraced its downtown. Insurance executives have long lived elsewhere, as did blue-collar employees of major U.S. defense contractor Pratt & Whitney.
Convoluted highway design hasn't helped, either. Construction of north-south Interstate 91 severed downtown from the Connecticut River's west bank. East-west I-84, meanwhile, cordoned a sliver of the core city and the impoverished North End neighborhood from downtown.
Connecticut itself has been in the rating agency crosshairs, having received four downgrades – three to its GOs and one to its special tax obligation bonds – since May. Moody' rates Connecticut GOs Aa3 with a negative outlook. S&P, Fitch and Kroll Bond Rating Agency assign AA-minus ratings, all with stable outlooks.
In early October, the state General Assembly's Office of Fiscal Analysis projected a roughly $78 million budget deficit for fiscal 2017.
The state's budget problems weigh on Hartford.
"From what I see, they'll ultimately need outside help," Schankel said of the city. "Connecticut's recovery is lagging, but the state will be the first door they'll knock on. Connecticut has a lot of wealthy resources but the lack of budget flexibility really hurts downstream. That hurts Hartford the way New Jersey's problems are aggravating Atlantic City's."
New Britain Mayor Erin Stewart, in a separate interview, acknowledged the dark shadow Connecticut's budget problems cast. "We can't get away from the fact that our mother government is faltering," she said. "Urban centers are reliant on state government."
Senate Minority Leader Len Fasano, R-North Haven, left the door open for a state solution.
"I like Mayor Bronin a lot. He's smart, perceptive and a man of his word," he said in an interview. "We worked very well with him when he was the governor's chief counsel. And certainly the strength of the state depends on the strength of our cities, New Haven, Bridgeport and Hartford.
"Certainly there are ways the state can provide help. That being said, if they want help, we should talk about the whole pie, including retirement plans and salaries. If you go to the bank for a loan, the bank has the right to look at your whole portfolio."
Fasano points to administrative costs within the education department – run separately from the city – which he said have spiked by nearly two-thirds over five years, where Hartford's population and teacher spending have risen by 2% and 4%, respectively. New Haven and Bridgeport have held steady, according to Fasano.
"We have to look at it. Maybe there's a good reason, I don't know," he said. "But superintendents come and go like NFL coaches. They're in North Haven, then West Haven, then Hartford. And like NFL coaches, they make salaries that aren't predicated on won-loss records."
Bronin said the board made some "significant cuts" to its education budget.
Hartford typifies older Northeast cities that have lost population and bread-and-butter business. According to Stoever Glass, population is down 21% since 1970; unemployment within the city is high, in contrast with the surrounding region. Income is below average and 50% of city housing was built before 1949, compared with only 30% for the state.
Long synonymous with insurance, Hartford has lost some jobs in that industry through corporate mergers and cutbacks. While giants Aetna Inc. and Travelers Cos. still reside there, its executives have complained, as have other corporate leaders, about the state's political and business climate. In a move that generated national headlines, General Electric Co. bolted Fairfield County for Boston.
"Mother Aetna," as many residents have called it over the years, is in merger talks with Humana Inc. of Louisville, which has some in Hartford worrying about more jobs siphoning to the south.
"It's been really important to rebuild a relationship with a major employer – important for the city and for the region at large," said Bronin. "They've been active in many philanthropic endeavors. But they'll make the ultimate decision."
Janney's Schankel said a Hartford makeover is possible.
"You see some cities reinventing themselves, building a tech center or whatever, and maybe Hartford's been a little reluctant about changing its insurance presence," he said.
"It reminds me a little of Pittsburgh. Twenty years ago it was similar to Hartford. The sidewalks folded up around 5 or 6 o'clock. But Pittsburgh has kind of reinvented themselves. Philadelphia also has a great downtown, which makes it great to be working here."
Bronin cited Providence as an example, despite the Rhode Island capital's struggles with budget deficits and unfunded pension liability.
"Providence still has some problems, but they've made a lot of progress. They've worked with the community to become a more vibrant city. Look around the country; there are a number of examples."
GE, in fact, chose Providence to locate 100 new technology jobs.
Hartford's ballpark debacle is not impeding other economic development efforts, said Bronin. "We've seen a lot of interest on the part of potential developers."
Bronin said Hartford still has some strong cards to play.
He cited a recent Brookings Institution commentary that pegged it as among 17 cities that could emerge as a "knowledge capital," and the University of Connecticut's move of its 2,300-student Greater Hartford campus from suburban West Hartford to the old Hartford Times building right behind City Hall.
"So many things are happening that are positive, and we have the potential to launch the kind of revitalization that people want to see," he said. He also pointed to the conversion of some vacant buildings to apartments and the addition of commuter rail service to the north-south New Haven-Hartford-Springfield corridor. "That's been a huge lack," he said of the latter.
First things first, though. Hartford, he said, must emerge from a fiscal quagmire.
"This city is at a crossroads."
