Nobody Wins if Hartford Goes Bankrupt

For Hartford, Conn., the threat of bankruptcy is real. Other cities have structural deficits but Hartford also faces an immediate cash flow crisis, the Hartford Courant reported yesterday. Structural deficits can be solved over time. Cash flow crises require immediate action so that the city can pay its bills. Earlier this year, the National Resource Network was brought on to help Hartford identify options to achieve fiscal sustainability. As the General Assembly considers proposals to aid Hartford and the city council debates budget for the fiscal year starting July 1, there are some preliminary findings. Bankruptcy or continued decline in city services would have a negative effect statewide. If Hartford went bankrupt, made draconian service cuts or adopted higher tax rates, local employers would have to consider whether they want to bear additional cost or risk — or leave. Bankruptcy would cause the city to spend millions in legal and other fees. It would limit the city's ability to borrow and make the long term investments needed to grow the economy. Hartford can avoid bankruptcy, but all stakeholders will need to address challenges head-on. There is no low hanging fruit left for the city to reduce cost or increase revenue — certainly not enough to close the projected gap in the next fiscal year's budget, let alone future projected deficits. Under the current rules, Hartford cannot win. That's why any solution will require a change to the rules.