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With the threat of bankruptcy hovering over Hartford, Conn., Democratic lawmakers said yesterday that they're fighting a plan to override Gov. Dannel Malloy’s veto of the Republican budget, which offered little additional aid for the troubled capital city, the Hartford Courant reported today. Mayor Luke Bronin has asked for at least $40 million more this year, on top of an expected $260 million. Bronin has threatened to file for bankruptcy if Hartford doesn’t get its needed state aid by early November. The city has a $65 million deficit and faces escalating debt payments. Democrats had set aside $40 million to $45 million more for Hartford in their spending plan, but a Republican budget was approved by lawmakers instead. The Republicans’ proposal only included about $7 million in additional aid to the city. Malloy vetoed the plan on Thursday. Now, an effort is underway to recruit votes for an override, though observers have said it is unlikely to succeed. The override requires a two-thirds vote in the House and the Senate. Republicans would need 29 Democrats in the House and six in the Senate to join them.

Connecticut’s cities and towns could face higher borrowing costs if Hartford moves ahead with a bankruptcy filing, an investment research firm warned this week, the Hartford Courant reported today. In a newsletter to bond holders and other investors, Municipal Market Analytics highlighted the issues that a chapter 9 petition could pose, including steeper interest rates when towns borrow for infrastructure projects, and a hit to the state’s bond rating. “Should the city of Hartford actually default or be permitted to file for chapter 9 bankruptcy, other CT cities are likely to face somewhat higher borrowing costs going forward,” the Concord, Mass., group wrote. “Larger, more stressed cities like New Haven could temporarily (for a month or so) lose access to the traditional, high grade bond market.” The state would probably also have to deal with a spike in borrowing costs, the firm said, “as investors (rightly) assume that a Hartford bankruptcy hastens the state’s ongoing economic contraction.”

Hartford, Connecticut’s cash-strapped capital city, suffered a fresh round of credit rating downgrades deeper into junk territory yesterday by two Wall Street credit agencies, a day after the city’s bond insurers said that they were open to debt restructuring, Reuters reported. The downgrades by S&P Global Ratings and Moody’s Investors Service put Hartford almost at the bottom of the credit scale and mean that the agencies view the city as essentially in default with little prospect for a full bondholder recovery. S&P slashed its rating by four notches to CC, and Moody’s dropped the city two notches to Caa3. Moody’s cited an “increased likelihood of default as early as November” and said its rating reflects its expectation that bondholders will recover just 65 to 80 percent of their principal investments.

The mayor of Hartford yesterday told bond investors that Connecticut’s cash-strapped capital city has no room left to tax or cut its way out of its fiscal crisis, a bond holder said, Reuters reported yesterday. Mayor Luke Bronin reiterated that Hartford needs a substantial amount of state funding to avoid a chapter 9 bankruptcy filing, according to bondholder Belle Haven Investments. Bronin laid out the city’s dire circumstances and its potential case for insolvency in a call with investors, said Matthew Dalton, CEO of Belle Haven, which holds $30 million of insured Hartford general obligation debt. He said the mayor revealed no new critical information on the call, which lasted roughly 15 minutes. The pre-planned investor call came hours after bond insurer Assured Guaranty Ltd. publicly offered to support a refinancing of Hartford’s debt under a new state law. Such a move would lower debt service payments over the next 15 years and push repayments further into the future, providing near-term breathing room for the city of 123,200 people.

A top Connecticut House Democrat said yesterday that Hartford will not have to file for bankruptcy, saying the troubled capital city will get the extra $40 million it needs this year, the Hartford Courant reported. But lawmakers were still negotiating last night and had yet to adopt a budget. “There will be no need to file bankruptcy,” Connecticut House Majority Leader Matthew Ritter (D-Hartford) said. “They will be able to pay their debts. They’ll be able to pay their legal obligations.” Mayor Luke Bronin warned last week that the city could seek chapter 9 protection if it doesn’t get its state aid by November.

Hartford, Conn., council leaders said yesterday that they oppose filing for bankruptcy, just days after the mayor warned he would seek that protection if the city doesn’t get state aid soon, the Hartford Courant reported today. “Filing for bankruptcy is something that will have devastating impacts and it should not be done in a hasteful way,” Wildaliz Bermudez, the panel’s minority leader, said. “There needs to be community conversations…. There are many things that have to happen before we even get to that level.” Bermudez and council President Thomas “TJ” Clarke II issued a statement yesterday saying that a “majority” of council members oppose bankruptcy. They called on the legislature to send assistance to the troubled capital city. “Bankruptcy should not be an option for Hartford,” Clarke said. Last week, however, Clarke and four other Democratic council members stood behind Mayor Luke Bronin as he declared that the city would seek chapter 9 protection if it didn’t receive its needed state aid within 60 days.

Hartford officials said yesterday that it would likely file for bankruptcy in 60 days unless Connecticut provides help for the capital city in the midst of a fiscal emergency, the Wall Street Journal reported. City officials warned Gov. Dannel Malloy (D) and state lawmakers that Hartford, which has a deficit approaching $50 million, wouldn’t be able to pay all of its bills within 60 days. Hartford officials said it would file for chapter 9 bankruptcy at that point unless the state legislature passes a budget that gives the city more funding or otherwise provides it with more cash. The state of Connecticut is facing its own fiscal challenges and has yet to pass a budget for the current fiscal year that would close a two-year $3.5 billion spending gap. Since July 1, state operations have been funded by an executive order signed by Malloy that has slashed funding for cities and towns across Connecticut.