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  #461  
Old 10-22-2017, 10:04 PM
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CONNECTICUT
http://www.ctnewsjunkie.com/archives...sion_contribu/
Quote:
Compromise Budget Would Eliminate Car Tax, Increase Teacher Pension Contributions

Spoiler:
HARTFORD, CT — Democratic and Republican legislative leaders in the House briefed rank-and-file lawmakers on the tentative compromise budget deal Thursday and emerged confident they can still pass a budget, even if they haven’t finalized it yet.

As the day progressed more details about what was in the proposal became known and the give and take of 13 days of closed-door budget negotiations came into greater focus.

One of the hurdles lawmakers faced was figuring out how to spare cities and towns from having to pay part of what will be a ballooning payment over the next few years to the teacher’s retirement system. Both Democratic and Republican lawmakers said that was the number one priority of the teacher unions and the municipalities.

Instead of asking towns to pick up part of the tab, it asks teachers to contribute 1 percent more of their salaries to their pensions. They currently contribute about 6 percent. The compromise budget would have them contribute 7 percent.

Lawmakers are hoping the additional contributions will begin to stabilize the fund.

The Connecticut Education Association said teachers are opposed to the increased contribution, which they are calling a tax.

“Over the years, the state has not fully funded or paid its share of the teacher retirement plan—which, at 4.56 percent, is less than what teachers have contributed for decades. It is unfair to punish teachers with an increase in the payroll tax to pay a portion of the state’s share.”

The compromise budget would also cap motor vehicle taxes at 39 mills in the first year and eliminate motor vehicle taxes, which are levied by municipalities, completely in the second year.

The last time lawmakers considered eliminating the motor vehicle tax was back in 2013.

According to the Office of Policy and Management the motor vehicle tax raises more than $700 million per year for cities and towns. Getting rid of it would force municipalities to find efficiencies or shift the amount they receive from motor vehicle taxes to real property taxes. The property tax is the only way municipalities can raise revenue.

“We believe not taxing a motor vehicle is a good policy,” House Speaker Joe Aresimowicz, D-Berlin, said.

He said it would be more efficient to pay the motor vehicle tax as part of the property tax.

“It’s a nuisance tax,” Aresimowicz said.

Kevin Maloney, a spokesman for the Connecticut Conference of Municipalities, said the organization opposes the elimination of the tax because it will only increase the tax burden on residents and businesses.

Eliminating the motor vehicle taxes is one of the outstanding issues Democratic legislative leaders and Republican legislative leaders have been unable to work out.

“That’s why I keep saying these are tentative agreements on major issues,” House Minority Leader Themis Klarides, R-Derby, said.

She said she can’t say how many of her members will or won’t support this compromise package “because there are always tweaks to be made.”

That being said, she said she’s proud of the “damage we stopped.”

At the same time there’s stuff in the tentative agreement that Klarides doesn’t like.

The compromise budget proposal would also sweep money from clean energy funds, including those paid for through ratepayers electrical bills.

Klarides said it wasn’t her preference to cut the funds, but that’s what it means to compromise.

Majority Leader Matt Ritter, D-Hartford, said people understood if they didn’t use some of those energy funds they would have to cut mental health or other social services.

“People understood it was a trade off,” Ritter said.

Michael Trahan of Solar Connecticut told Aresimowicz and Ritter that “using ratepayer money as taxpayer revenue is a gimmick plain and simple.” He said it’s simply hiding behind “kids and old people to avoid making truly difficult spending cuts or increasing taxes.”

He called it a “new legislative low.”

Aresimowicz said “a vast majority” of Democratic lawmakers will vote in favor of the compromise budget.

Since the budget proposal would include a constitutional spending cap it’s necessary for it to pass the House with 91 votes and the Senate with 22 votes.

The spending cap calculation will include the contribution to the state employees pensions after 2023 and the teacher’s pension fund contributions will be added after 2027. Any federal funding that is a federal mandate would be excluded in the first year and rolled into the second year.

“So it will be a true spending cap,” Aresimowicz said.

In order to pass a budget that includes a constitutional spending cap the legislature would have to pass it with 91 votes in the House and 22 in the Senate.

The compromise budget would also increase cigarette taxes to 45 cents per pack, raising taxes on a pack of cigarettes to $4.35.

It would also cut the University of Connecticut’s budget about $65 million per year, which is more than the governor proposed but less than what the Republicans proposed. The budget also cuts funding for the Connecticut State University System by $14 million in the first year and $21 million in the second year.

Aresimowicz and Senate President Martin Looney, D-New Haven, are expected to meet with the governor on Saturday to brief him on the budget.

Gov. Dannel P. Malloy, who vetoed the Republican budget that passed with the help of eight Democrats, said he doesn’t have a budget document in front of him so he can’t make a judgment about what legislative leaders have proposed.

“One of the things we want to see is what is the spending cap language,” Malloy said.

He said without a single Republican vote for a budget in a decade getting a spending cap has been “impossible.” He said it may be possible now, but “we don’t know what the language is.”

Malloy has been running the state by executive order since July 1. This is the longest the state has ever gone without a state budget.



http://www.courant.com/politics/hc-p...021-story.html

Quote:
State Treasurer Warns Legislators On Bond Payments, Pension Funds


Spoiler:

State treasurer Denise Nappier warned legislators Saturday about making the proper financial moves while crafting a two-year, $40 billion state budget.

In a rare statement, Nappier issued her concerns in advance of possible votes this week on a bipartisan budget deal that was crafted by legislators without input from Gov. Dannel P. Malloy.

One of the key provisions calls for an annual bonding cap of $2 billion, promoted by Republicans concerned that the state has been borrowing too much money in recent years and can no longer afford the debt payments.

Nappier, an elected Democrat who oversees the sale of state bonds, said the proper language must also accompany any bonding changes in the budget bill that is still being written by a team of legislative attorneys.

“The state may not have the cash to pay its bills if a cap on bond issuance is not accompanied by a similar cap on bond-funded capital spending,” Nappier wrote. “Furthermore, the pipeline of capital projects already underway reduces the ability to achieve short-term savings. Thus, if the state spends more on capital projects than we can raise through bond sales, we would need to cover those project costs with the state’s operating cash from its cash pool.”

Nappier also is concerned about the setup of a plan to require public school teachers to contribute an additional 1 percent to their pensions to help fund the pension system. Teachers now pay 6 percent into the fund, and that would increase to 7 percent in 2018. The Connecticut Education Association, the state’s largest teachers’ union, has blasted the idea as a “teacher tax,” but both House Republican leader Themis Klarides of Derby and House Speaker Joe Aresimowicz of Berlin have rejected that characterization. Instead, they say the bipartisan bill calls for an additional payment into the pension fund.

Nappier is warning that any pension payments that are directed into the state’s general fund, rather than the teachers’ pension fund, “could result in significant tax liability for teachers.” She added that payments into the general fund “could jeopardize the tax-exempt status of the entire” Teachers’ Retirement Fund.

Legislators said a drafting error in a budget bill that was vetoed by Malloy had called for directing that money into the general fund. They said the intent of the General Assembly is to ensure that the money is directed only into the teachers’ pension fund, not into the general fund for other spending purposes.

A Senate Republican spokesman said Saturday that the bipartisan budget satisfies all of Nappier’s concerns.

Legislators have been battling over the budget since Malloy first unveiled his proposal in early February, and the clash has become the longest fiscal stalemate in Connecticut history — surpassing the epic, summer-long battles to create the state income tax that ended on Aug. 22, 1991.

Malloy has not yet agreed to sign the bipartisan deal that was reached last week by Republicans and Democrats, and lawmakers are considering whether they can gather 101 votes in the House and 24 in the Senate for an override if Malloy vetoes the two-year package.


HARTFORD

http://www.governing.com/week-in-fin...-medicaid.html
Quote:
The Week in Public Finance: Hartford Nears Default, Columbus Soccer Threatens to Move and More

Spoiler:
Hartford Could Be Nearing Default

With no aid from the state in sight, Hartford, Conn., could default on its debt as early as Nov. 15, says Moody’s Investors Service. The capitol city, which has publicly explored the possibility of filing for bankruptcy, has requested an additional $40 million to help balance its fiscal 2018 budget and preserve cash flow.

Last month, Mayor Luke Bronin said the city only had enough on tap to meet its financial obligations through the end of October. That could change if the state decides to step in and help. But that's highly uncertain: Connecticut still does not have an operating budget.
According to Moody’s, Hartford is facing operating deficits of $60 million to $80 million per year through 2036, or 11 percent of the budget. The city has said that it would receive roughly $50 million more annually if the state fully funded its payment in lieu of taxes, which is made to compensate local governments for some or all of the tax revenue lost due to tax-exempt property. That would go a long way to solving Hartford’s structural problem.

The Takeaway: The lack of a state budget is forcing Hartford and other Connecticut localities into fiscal crises. That's because unlike in other states that have stalled on a budget, many cities in Connecticut are highly dependent on state aid.

Moody’s earlier this week placed the ratings of 26 cities, towns and three school districts under review for possible downgrades, affecting approximately $3.5 billion in outstanding debt. The cities being reviewed include Bridgeport, New Haven and West Hartford.

Hartford has already been downgraded deep into junk bond territory. If the state doesn’t help Hartford balance its budget and the city does default or file for bankruptcy as a result, there would likely be a ripple effect on other vulnerable Connecticut municipalities.


http://www.hartfordbusiness.com/arti...WS01/171019876
Quote:
Bankruptcy a plausible option, as Hartford's fiscal crisis peaks

Spoiler:
Three men with intricate knowledge of municipal bankruptcy told a Hartford audience Thursday morning that a Chapter 9 bankruptcy would be painful, but that it could set the Capital City on a path to a better future.
The process – should Hartford seek it – is best done with communication between major stakeholders, from creditors to businesses to residents and even surrounding towns, they said.
"[Bankruptcy] is a tool in the toolbox of managers and others to restructure an inexorable situation," said Kevyn Orr, an attorney who helped orchestrate Detroit's 2013 bankruptcy as the appointed emergency manager.
Orr said he is "really astounded" by how Detroit's central business district has recovered and grown in the four years since he left his job there.
Don Graves, senior director at Key Bank and a former Obama administration official who worked with Orr to provide federal assistance to Detroit during its bankruptcy, said Hartford shouldn't wait if its situation is truly unsustainable, as Mayor Luke Bronin has argued.
"Now is your chance," Graves said. "If you don't do it now it's going to be really ugly and much harder in another five, 10 or 20 years."
Hartford is likely to default on its financial obligations by November, Moody's Investors Service said Thursday. Meanwhile, legislative leaders said they had a tentative plan in place that could help the city avert bankruptcy, but lawmakers this week were still pursuing a budget they could pass and Gov. Dannel Malloy would sign.
James Diossa, mayor of Central Falls, Rhode Island – which emerged from bankruptcy in 2012 – said it's crucial that business people stick by their city.
"It's easy to just get out of Hartford and move your business somewhere else, but it's so important that you stay committed," Diossa said. "If you stay committed, other businesses interested in Hartford will see that."
The forum was hosted by the MetroHartford Alliance, which has supported Bronin in his approach to the city's struggles.
All three panelists on Thursday commended Bronin for bringing Hartford's financial troubles to the forefront.
"When you're in the mayor's office behind that desk, the world looks very different," Diossa said. "It's not easy."
There are plenty of downsides to bankruptcy, from potential impacts on employees and retirees to the black eye the city could suffer in public perception.
Diossa recalled listening to retirees in tears about their pensions being slashed by 50 percent in Central Falls, where an $80 million funding shortfall was too much to overcome during bankruptcy.
"That was very painful to watch," he said.
Indeed, pensions could be on the table in a bankruptcy, Orr said, but there's a catch. Vested benefits within systems that are well funded stand a better chance of not being cut.
"Pensions are typically backstopped by assets in the pension fund," Orr said.
Hartford, as of July 2016, had funded its pension plan at nearly 75 percent, according to actuarial reports from the City Treasurer's office.
There could also be negative impacts on surrounding communities' credit ratings, if Hartford were to file for bankruptcy.
"What we're really talking about is contagion," Orr said. "In the short term, there's a risk."
He said a swifter bankruptcy would yield better results.
"You want to get in and out as quickly as possible," he said.
That should mean that stakeholders who agree to settlements with the city earlier should get more favorable terms than those who hold out.
"That's just the deal," he said.
Short-term warning
Meantime, Moody's Investor Service predicted Thursday that the city of Hartford will likely default on its debt as early as November, but that projection doesn't take into account this week's latest budget developments.
Hartford currently has approximately $604 million in general obligation and lease debt, Moody's analyst Nicholas Lehman said. The city has requested an additional $40 million from the state of Connecticut to help balance its fiscal 2018 budget and maintain a positive cash flow, he said.
In the state's "tense" political climate, the availability of short- and long-term support is "highly unknown," Lehman said. In addition, Hartford was included Wednesday in a top 10 list of most distressed small cities, according to an index put out by the Washington, D.C.-based Economic Innovation Group.
Under the latest budget plan lawmakers are crafting, Hartford would receive aid from the state of Connecticut, though details about what and how much remain veiled. Lawmakers on Wednesday said they had achieved the framework of a bipartisan budget deal, but were circumspect about the specifics.
And on Monday, Gov. Dannel P. Malloy issued a budget revision of his own, providing additional funding for Hartford.
In the meantime, Moody's latest analysis reaffirms the precariousness of Hartford's situation, with Lehman suggesting Hartford will default soon, declare Chapter 9 bankruptcy, or do both without additional concessions from the state, bondholders, and labor unions.
Moody's analysis also projects annual operating deficits for Hartford ranging from $60 million to $80 million every year through 2036. The city's high fixed costs are largely driving these deficits as they represent nearly a quarter of the fiscal year 2018 budget, Lehman said.



http://www.courant.com/news/connecti...019-story.html

Quote:
Moody's Warns of 'Likely' Hartford Default, Decades of Deficits Ahead

Spoiler:
Moody’s Investor Service issued a dire warning to lenders Thursday: Hartford is likely to default on its debt by November and, if it doesn’t change course, will run up annual deficits exceeding $60 million through the next 20 years.

On Sept. 26, Moody’s downgraded the city’s bond rating, reflecting the investor service’s belief that “in the likely event of a default,” bondholders may recover as little as 65 percent of their investment.

Moody’s projects that the city’s operating deficits will reach $60 million to $80 million per year through 2036, largely driven by fixed costs, which command 23 percent of Hartford’s 2018 budget, according to a Moody’s analysis. Those fixed costs include pension contributions, benefits, insurance and debt payments.

“Revenues are not keeping up with the growth of these expenditures,” Moody’s warned, “and highlight the need for concessions from three primary stakeholders — bondholders, the state and labor unions — to achieve financial sustainability.”

The lack of a state budget has hamstrung Hartford’s attempts to maneuver itself out of fiscal crisis, Moody’s said. It believes the city will be able to pay $21 million in tax anticipation notes due Oct. 31, but warned that a default on debt could come as soon as Nov. 15, when another debt payment looms.

Hartford Mayor Luke Bronin said the Moody’s report underscores the need for “structural” change and pointed to the bipartisan budget deal announced this week by Republican and Democratic leaders in the General Assembly.

“It is my understanding that the agreement includes a framework that may allow the state to partner with the city in a sustained way,’’ he said. “That said, any adequate and sustainable solution is going to require the partnership and participation of all of our stakeholders.”

Moody’s report called Hartford’s unions “a constraint” to trimming the city’s deficit. “Contractual salary increases and employee benefits are significant contributors to the city's long term structural imbalance,” the report said. Unions would have to make “significant concessions” for Hartford to narrow those deficits, it said.

High labor costs stem from “decades of contractual salary increases and employee benefits,” Moody’s wrote, and those benefits — which include health insurance, pensions payments and workers compensation, among others — are expected to increase by $21 million in 2018. Moody’s found that benefits and insurance costs have increased 6 percent each year for the last 10 years, compared to an annual increase of just 2 percent in the urban consumer price index during the same period.

Moody’s suggested that the General Assembly craft legislation that would open up the arbitration process and allow municipalities to renegotiate contracts.

Of the three avenues Moody’s outlined — debt restructuring, increasing state aid and renegotiating labor contracts — debt payments would be “a smaller source for potential concessions” than escalating state aid or negotiating with unions, it said.

Moody’s said bondholders and city leaders discussed issuing new refunding bonds with a maturity of 30 years, rather than the previous cap of 20 years, which “would provide principal repayment in full but over a longer period.”

While that maneuver would reduce Hartford’s immediate deficits, the city would be forced to pay more interest, increasing the cost of its debt, Moody’s wrote.

Hartford Mayor Luke Bronin has said he is not interested in saddling Hartford with mounting interest for decades to come, and Moody’s said it does not expect him to take this route.

Bronin has requested $40 million from the state legislature in aid to the capital city. Nicholas Lehman, a Moody’s analyst who authored the report, said that while the money would be welcome in the short term, more needs to be done to bring the city onto firmer fiscal footing.

“If they provide funding around $40 million, what the mayor requested, that should provide short term relief,” he said. “That was to fulfill the fiscal year 2018 budget gap. That money alone, though, would not be enough for a long term solution.”

The General Assembly, which announced yesterday it has drafted a bipartisan budget, is considering a bailout for Hartford that could help the city avert bankruptcy.

Lehman said Atlantic City, N.J., once faced a financial outlook bleak as Hartford’s, but managed to fend off bankruptcy and default with a dramatic injection of state aid.

“They had a similar rating, and they were on the verge of default,” Lehman said. “But at the last minute the state stepped in, and a default was averted.”

In Hartford’s case, a default doesn’t necessarily equate to a bankruptcy filing, Lehman said.

“It’s not so cut and dry on the next step the city is going to take,” Lehman said. “Just because a city defaults on its debt doesn’t mean it’s going to declare bankruptcy. And just because it declares bankruptcy doesn’t mean it’s not going to default on its debt.”


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Last edited by campbell; 10-22-2017 at 10:12 PM..
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  #462  
Old 10-23-2017, 05:51 PM
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Mary Pat Campbell
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HARTFORD, CONNECTICUT

https://www.wsj.com/articles/hartfor...ing-1508695937

Quote:
Hartford City Workers Nervous Ahead of Potential Bankruptcy Filing
The Connecticut state capital could seek authority to file for bankruptcy as early as November
Spoiler:
Public-sector workers in cash-strapped Hartford, Conn., are on edge as city officials have said the state capital could seek authority to file for bankruptcy as early as November.

State lawmakers, who are confronting their own two-year deficit of $3.5 billion, will have a big say in how that plays out. Legislative leaders say they reached a tentative state budget agreement that would give Hartford additional aid, and they expect to approve it this week.

But after a series of false starts in the budgeting process, some are still uneasy.

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“It’s nerve-racking because obviously the clock is ticking,” said Larry Dorman, a spokesman for Afscme Local 1716, which represents about 400 city employees, including those in the departments of public works, sanitation and parks. “When you’ve seen bankruptcy in other cities, it’s always taken the biggest toll on the workers. That’s neither right nor fair.”

In early September, city officials warned Gov. Dannel Malloy and state lawmakers that Hartford wouldn’t be able to pay all of its bills within 60 days and could seek authority to file for chapter 9 bankruptcy in early November unless the legislature provided the city with more cash.

Unions representing public employees say they are worried their members will be asked to make unreasonable sacrifices to fix Hartford’s financial problems even if the city doesn’t proceed with bankruptcy. Several municipal contracts have expired and need to be renegotiated.

“It is true that we are asking more from our unions than we have asked for in the past, and more than they have yet been willing to give,” Hartford Mayor Luke Bronin said. “But I don’t think what we are asking for is disproportionate. The solution will require the participation of all of our stakeholders.”

Mr. Bronin, a Democrat, said the state, bondholders and employees need to help the city get on better financial footing over the long term. The city has a deficit of about $50 million, and Moody’s Investors Service says that figure will range annually between $60 million and $80 million through 2036 without changes. Moody’s downgraded the city’s credit rating last month further into junk territory, down two notches to Caa3.

Rapidly increasing costs for health care, pensions and debt service have fueled Hartford’s fiscal challenges. The city must pay nearly $180 million—more than half of the municipality’s non-education budget—on debt service, health care, pensions and other costs for the current fiscal year.

The city’s tax base isn’t large enough to produce the revenue needed to cover those growing expenses because taxes aren’t levied on more than half of the property in Hartford, such as state buildings, hospitals and colleges, Mr. Bronin said.

The state reimburses Hartford for some of those losses but not all. A full payment under the state’s formula would give Hartford an additional $52.3 million in the fiscal year that ended in June, according to city officials.

Sgt. John Szewczyk, president of the Hartford Police Union, says the city should focus on getting the funds it is owed by the state rather than seeking concessions from unions.

“Hartford is not in this financial situation because of labor,” Sgt. Szewczyk said. “We are vastly underpaid compared to departments in the area. We are vastly overworked.”

The state legislators’ tentative budget agreement calls for the creation of a board that would have an oversight role over Hartford’s finances,which Mr. Bronin proposed last year. Some union leaders say such a board also could produce bad results for public employees.


“Somehow we become the boogeyman in oversight and or bankruptcy talks,” said Vincent Fusco, president of the Hartford Fire Fighters Association. “But nobody ever talks about how the greatest amount of debt is owed by the bond market and bankers, and they want to take it out of our hide to pay them back. That doesn’t even pass the smell test.”

Hartford Fire Fighters is one of the few unions that has renewed its contract with the city. In the contract that goes through 2020, the union agreed for its members to make higher pension and health-care contributions, saving the city $3.5 million, Mr. Fusco said.

If the city files for chapter 9 bankruptcy, “we would be in front of a bankruptcy judge saying we have already done our part,” he added.

http://www.ctpost.com/business/artic...t-12294360.php

Quote:
Dan Haar: Hartford troubles could have wide impact

Spoiler:
Early this week, the Business Council of Fairfield County will host Hartford Mayor Luke Bronin in Stamford to talk about a possible bankruptcy of the capital city.
Neither the council nor the mayor’s office announced the confab and there are no public events connected with Bronin’s trek down to the much healthier city that passed Hartford in population four years ago. But the gathering will amplify the idea that the pain from an ailing central city in a small state throbs from border to border.
“We’re meeting with him because you can’t have a state in which its capital city goes bankrupt,” said Joe McGee, vice president for policy at the council and a former state economic development commissioner. “There’s got to be an urban strategy and Fairfield County has as much a stake in this as anyone.”
That’s true for lots of reasons, from the simple fact that residents and institutions in this part of the state could well hold hundreds of millions of dollars in shaky Hartford debt, to the more layered idea that state finances — read: stable taxes — depend on functioning cities across Connecticut.
Climbing the ladder of complexity, we have a bond market that may or may not punish municipalities not named Hartford in the event of a capital city bankruptcy — there’s a lot of debate about that among analysts.
And the most important worry: how Hartford’s ills will worsen the battered image of the state in places like Greenwich and Westport, not to mention Stamford and Norwalk, as these stronger cities and towns ply the narrative that businesses and families will love Connecticut’s quality of life.
For all those reasons, the argument goes, Connecticut simply can’t become the first state with its capital city in bankruptcy court. And yet it’s a real possibility. Just Thursday, two power brokers who guided Detroit through the nation’s largest municipal bankruptcy in 2013-14 came to Hartford to declare that a court filing is “another tool in the tool box,” nothing to be afraid of.
And if there’s any doubt that the economy of southwestern Connecticut is tied to Hartford — along with the obvious connections to New York, of course — consider that on the same morning when those Detroit bankruptcy veterans paid a visit, the state Department of Labor announced that Connecticut’s economy has shed 7,200 jobs over the last three months. And on Monday, Moody’s Investors Service tagged 29 Connecticut municipalities and regional school districts with a negative credit outlook, and put an additional 29 on a watch for imminent downgrades, all because of the state fiscal crisis.
The message in all this: No section of this plot of land between New York and Boston is immune as we tread water for another year while much of the country rides the rapids.
“Connecticut is a small enough state that you have to think of the entire state as a region,” said Don Graves, who was the top Obama administration official in the Detroit bankruptcy and is now a senior vice president at Key Bank, helping places such as Hartford dig out of trouble.
None of this points to any simple answers. To hear many people talk around the state, including in Fairfield County, Hartford should solve its own damn problems, starting with more concessions from municipal unions and cutting local services. Lawmakers, many from the Republican strongholds of Fairfield County, grumble over Bronin’s plea for at least $40 million in state aid on top of the $269 million the city already gets.
They grumble, but for now, they appear ready to write the check.
Grumbling aside, the rest of the state has a huge incentive to avert a Hartford bankruptcy because of the optics even as Hartford itself has less to lose by filing.
Unfortunately, this year’s $40 million infusion will stave off bankruptcy for only about nine months before Hartford needs another shot in the arm. What’s needed, what the whole state must back, is a long-term “structural reform,” to use the political phrase of the year.
If the state only barely patches up the problem year after year, without a deeper, strategic plan of the sort McGee and Bronin are talking about — a plan that will cost money from the towns that have it — Hartford might as well just go ahead and file for bankruptcy. We’d all be better off with a Chapter 9 municipal filing than a slow bleeding.
The middle course now, favored by Sen. L. Scott Frantz, R-Greenwich, ranking Republican on the General Assembly’s finance committee, is a state takeover, similar to what we saw in Waterbury in 2002 and a modified version of Bridgeport in 1991.
The world is watching closely, and it’s watching the Gold Coast of Connecticut just as it watched towns in Michigan after the Motor City’s filing. There was some evidence of more difficulty issuing bonds, analysts say, but not much. One big help in Michigan was a governor able to assure investors there was no contagion, said Matt Fabian of Westport, a partner at Municipal Market Analytics.
This time around, the state can make no such promises, Fabian fears, as state cutbacks hit towns.
But the biggest issue is the one at the core of all economics. “If your capital city files for bankruptcy,” Fabian said, “it doesn’t make you feel good.”
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Old 10-24-2017, 06:57 AM
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HARTFORD, CONNECTICUT

http://www.courant.com/community/har...023-story.html

Quote:
Mayor Luke Bronin Says Budget Deal May Help Hartford But More Work Needed

Spoiler:
The latest state budget agreement, reached last week, could help solve Hartford’s financial problems, but more work is needed to put the city on stable footing, Mayor Luke Bronin said Monday.

Lawmakers struck a deal that would give Hartford the extra $40 million it needs to avoid bankruptcy. Half of it would be funneled to the city from an account set aside for distressed municipalities.

The other half would come through a refinancing of Hartford’s debt. The state would assume at least $20 million of the city’s debt payments each year.

“It’s my understanding that the budget agreement reflects a bipartisan recognition that Connecticut needs a fiscally sustainable capital city, and that the agreement includes some important tools to help achieve that goal,” Bronin said in a statement Monday.

“Regardless of what’s in this budget, any truly sustainable solution is going to require the partnership and participation of all of our stakeholders, and we will have a lot of tough and important work left to do.”

Bronin last month threatened to file for bankruptcy if the city didn’t get its additional state aid by early November. He told Gov. Dannel P. Malloy and legislative leaders that without a budget deal, Hartford would be unable to pay its bills by Nov. 6.

The city faces a $65 million deficit, and is expected to run into cash flow problems of $7 million in November and $39.2 million in December.

Last week, Moody’s Investors Service said that the city faces operating deficits of up to $80 million per year through 2036 and predicted a “likely” default on debt as early as next month without significant concessions from bondholders and employee unions, and an additional $50 million in state aid.

Restructuring Hartford’s $604 million in outstanding debt could mean substantial losses for investors, the agency said. Another option would be to refinance the city’s bonds over a longer period, to 30 years.

“However, while the refinancing would reduce operating deficits in the next few years, it would also extend the debt service payments and greater interest payments would increase the overall cost of the debt,’’ Moody’s concluded.

House Majority Leader Matthew Ritter said last week that under the latest agreement, the state would set aside $28 million for financially troubled municipalities. Hartford would get about $20 million of that, but would be subject to an oversight board.

Regardless of what’s in this budget, any truly sustainable solution is going to require the partnership and participation of all of our stakeholders.
— Hartford Mayor Luke Bronin
The board initially will include a mix of state officials and labor representatives, appointed by the governor and lawmakers. It will oversee decisions made at the local level, and if finances don’t improve, could step in and take control of Hartford’s spending. If that happened, Ritter said, Bronin and a member of the city council would join the oversight panel.

The board would have the authority to reject new union contracts. The city so far has only reached deals with two of its labor unions — the Hartford Firefighters Association and the Hartford Federation of Teachers.

Negotiations with several other groups, including the police union, the Hartford Municipal Employees Association and the American Federation of State, County, and Municipal Employees, Council 4, Local 1716 — one of the city’s largest unions — are still underway.

Bronin is pursuing a minimum of $4 million in employee concessions this year to balance the city’s budget.

Under the state budget agreement, Hartford would also be required to refinance its debt – reducing immediate contributions by stretching payments farther into the future. As part of that plan, the state would take on at least $20 million of Hartford’s debt each year, Ritter said.

The General Assembly must still approve the budget, and details of the refinancing must be hashed out.

Greater interest payments would increase the overall cost of the debt.
— Moody's Investors Service
Robert Lamb, a financial expert hired by Hartford’s bond insurers to come up with strategies outside of bankruptcy, said the debt restructuring would lower the city’s annual contributions to around $40 million. Currently, Hartford’s payments are expected to top $60 million by 2021.

Lamb said the city, whose bond ratings are in junk territory, would benefit from the state’s backing.

“The state is rated A+ … so it’s a big credit lift for the state to guarantee it,” he said.

Bronin previously expressed caution about refinancing the city’s debt, saying he didn’t want to burden future leaders with hefty payments.

Asked recently about it, the mayor declined to comment, saying he hadn’t seen specifics of the new budget deal.

Robert Tucker, a spokesman for Assured Guaranty, Hartford’s largest bond insurer, said the company is eager to work with Bronin. The group earlier this year had suggested the city refinance its debt.

“The next few days are critical for the state of Connecticut,” Tucker said. “Quick enactment by legislative leaders and Governor Malloy of a budget that provides for the safety and welfare of the state, and includes sufficient aid for the city of Hartford, will reduce the likelihood of widespread financial difficulties.”

Legislators are expected to vote on the budget later this week.



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Old 10-24-2017, 10:34 AM
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PENSION REFORM EFFECT

http://crr.bc.edu/briefs/how-have-mu...ension-reform/

Quote:
How Have Municipal Bond Markets Reacted to Pension Reform?

byJean-Pierre Aubry,Caroline V. CrawfordandAlicia H. Munnell
SLP#57

The brief’s key findings are:

Bond rating agencies have begun accounting for public pension funding and have cited pensions in several downgrades.

As a result, state and local governments see that their pension finances could threaten their ability to borrow at affordable rates.

This study examines the impact of both pension finances and pension reforms on borrowing costs from 2009 to 2014.

The results show that a higher ratio of unfunded pension liability to government revenue is related to increased borrowing costs.

Pension reforms appear to reduce borrowing costs but the result is not statistically significant, perhaps because those making changes also had poor general finances.
Ya think?

full brief:
http://crr.bc.edu/wp-content/uploads/2017/10/slp_57.pdf
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Old 10-24-2017, 11:22 AM
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HARTFORD, CONNECTICUT

https://www.bloomberg.com/news/artic...se-leader-says

Quote:
Hartford Bankruptcy Unlikely If Budget Passes, House Leader Says
Spoiler:
The majority leader in Connecticut’s Democrat-controlled House of Representatives said he “can’t envision any scenario" in which Hartford would seek to declare bankruptcy if a bipartisan budget that provides a financial lifeline to the capital city becomes law.

Matt Ritter, who represents Hartford and is the second-most-powerful Democrat in the House, said the budget would give the city about $20 million in aid from a fund for distressed municipalities and provide $20 million a year to cover costs on its bonds. Hartford would also be able to issue debt backed by Connecticut, which would allow it to save money by refinancing at lower rates.

“It doesn’t mean the city is out of the woods yet, they have to govern locally and make decisions," Ritter said in a telephone interview. But “if this bill passes the state would have done above and beyond what was asked of us. The state would have given the city all the tools and resources it needs to put itself on a firmer footing."

Hartford’s bonds have tumbled since credit-rating companies cut the securities deeply into junk grade, and Moody’s Investors Service has warned that the city could default as soon as next month. If it went bankrupt, it would be the biggest U.S. city to do so since Detroit’s collapse four years ago.

Hartford will get cash “very, very quickly" if the legislature’s bipartisan budget is signed into law, said Ritter, who is also a municipal-bond attorney at Shipman & Goodwin LLP in Hartford. Lawmakers may vote on the budget this week. Ritter said he wasn’t worried about the city’s ability to pay about $20 million in notes due Oct. 31.


Mayor Luke Bronin said the capital city would be pushed to seek bankruptcy by next month if the state fails to enact a budget and provide the city with additional aid. Hartford, where a third of its 123,000 residents live in poverty and about half the property is tax exempt, faces a $50 million deficit, nearly 10 percent of its budget. In the last year, debt costs have almost doubled to about $60 million while pension and benefit payments increased almost 30 percent.

“No matter what’s in the state budget this year, any truly sustainable solution is going to require the participation of all of our stakeholders -- including labor and bondholders, " Bronin said in an emailed statement. “That means we’re going to have a lot of tough, important work left to do.”



Hartford’s police officers have been working without a contract since July 2016. The city’s biggest civil employees union in May rejected a contract that would have saved the city about $4 million over six years, according to the Hartford Courant. Bronin hasn’t specified the concessions he’s asking for.

Connecticut’s bipartisan budget would also establish a Municipal Accountability Review Board composed of representatives of the governor’s office, the state treasurer and labor whose powers would depend on the “tier" that municipalities are designated. In tier 3 municipalities, like Hartford, the board would have the power to review all collective bargaining agreements, arbitration awards and bond authorizations.

Connecticut’s Special Capital Reserve Fund, which would be used to back newly issued Hartford bonds, is a longstanding mechanism to provide additional security for authorities or municipalities by guaranteeing to replenish draws on debt-service reserves. The state used the SCRF program to back $100 million in deficit financing by Waterbury as part of a bailout of the city in the early 2000s.


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Old 10-25-2017, 05:25 PM
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CONNECTICUT

http://www.golocalprov.com/politics/...artford-moodys

Quote:
Riley: Connecticut Municipalities in Scramble With Hartford & Moody’s

Spoiler:
Last week Moody’s initiated reviews for downgrades of 29 Connecticut local governments affecting $3.5 Billion of outstanding debt.
Connecticut has been operating without a budget since the beginning of the current Fiscal year July 1, 2017. Without a budget, expenditures are controlled by the Governor through the use of an executive order.

Under the current executive order, state funding of local governments is nearly $1 billion less than last fiscal year. Moody’s mentions localities in Connecticut have unlimited property tax “flexibility” which makes bondholders happy but not taxpayers.

Hartford is at the center of the storm where the Moody’s note reads, “Hartford is likely to default on its debt as early as November without additional concessions from the State of Connecticut, bondholders and labor unions.” The report further states, “The State can fully fund its PILOT payments, bondholders can accept a haircut or less returns or a longer payout and or Unions can offer concessions”

Lower taxes accompany growth, higher taxes retard growth.

Like Puerto Rico, Hartford has no other realistic solutions. Half of Hartford’s property is tax exempt. Now where have Rhode Islanders heard that before? (Hint: It's where the Grays used to play).

Hartford taxpayers pay the highest mill rate in the state and as some politicians have learned higher taxes erode economic growth prospects. The effect of higher property taxes in Providence is clear as the City slowly chokes. Its amazing Elorza and Raimondo do not get that lower taxes accompany growth and higher taxes retard growth.

According to an editorial in the Hartford Courant, Hartford’s key financial problem is its fixed costs – the bills it is obligated to pay in upcoming years.

These Include:

Debt Service (interest on loans taken years ago)
Benefits due to retirees (promises inked long ago for work already performed)
Current cost of labor- teachers, police, fire politicians and staffers
Moody’s projects the city will fall $60 to $80 million short of its obligations. Approximately $618 million will have to be paid in debt service over the next 19 years and $6.6 BILLION will have to be paid in labor costs for salaries, benefits, (insurance and pensions).

The Courant concludes labor costs will eventually choke the city to death and Moody’s estimates that Hartford needs about $840 million over that time to keep Hartford from running deficits (which, by the way, are unlawful).

Moody’s makes an additional point about “binding arbitration."

“The state could provide non-financial support by adopting legislation to relieve municipalities of the current binding arbitration process.” In Rhode Island, some backward thinking-Democrats have consistently and irresponsibly proposed the opposite

So far, unions in Connecticut have their back up and are prepared to fight. If they were to follow Providence and Rhode Island, the Connecticut unions can then convince vote hungry assembly members that they can assuage bondholders and thus Moody’s, by giving GO bondholders first lien on taxes. This will then force State Taxpayers to bail out Hartford. Labor friendly legislators would obviously then be well rewarded for such legislation and produce targeted bailouts as in Central Falls case in Rhode Island and of course re-election. Now wouldn’t that be Raimondo like? Then Luke Bronin can laugh at Bankruptcy just like Jorge Elorza does. The joke will be on State Taxpayers. Hah, Hah!!!

Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.

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Old 10-25-2017, 11:03 PM
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NEW YORK

http://nypost.com/2017/10/21/signs-o...budget-crisis/
Quote:
Signs of a coming New York state budget crisis
Spoiler:
If Tom DiNapoli’s new report on state finances is any guide, Gov. Cuomo’s luck may be about to run out.

As the Empire Center’s E.J. McMahon notes, the state comptroller’s latest cash report cites tax receipts $387 million short of recent projections — and $2 billion below what Cuomo counted on in January.

Lower personal-income-tax payments are mostly to blame. That, McMahon adds, may reflect a sluggish economy or high-income households fleeing the state.Meanwhile, Albany already faces a $4 billion hole in next year’s budget. The governor’s also warning that changes in Washington, on health care or tax reform, could cost “$2.6 billion to $17 billion” more.

All of which raises a question: Why hasn’t Cuomo been squirreling extra pennies for that rainy day? As McMahon notes, the gov has raced to spend newfound cash from legal settlements with banks on things like universal pre-K, “free” college tuition, some tax cuts and plugging budget holes.

Cuomo also has skimmed $1.3 billion from a one-time $10 billion-settlement jackpot to offset recurring expenses. That kind of budgeting is what brought Gotham to the brink of bankruptcy 40 years ago.

Plus, McMahon observes, Cuomo is now using the “baseline” budget gimmickry he himself bashed, and discarded, in his first years in office. That’s clear from the state’s future-year financial plans, which assume outlays above the gov’s 2 percent cap.

Indeed, the Citizens Budget Commission confirms that the governor has already begun exceeding that 2 percent cap, though he hides it via sneaky budget tricks.

Alas, at some point, the piper will have to be paid. Cuomo has been lucky to preside over seven years of solid tax revenue (and that $10 billion-settlement windfall), enabling him to spend freely and even launch big infrastructure projects (e.g., the Tappan Zee Bridge re-do). With an election year coming up, expect the gov and Legislature to shower special interests with even more funding.

But Cuomo can’t repeal the laws of math: To avoid red ink, he’ll have to tighten his belt or raise taxes, sending more taxpayers fleeing. Buckle your seat belt, New York.


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Old 10-27-2017, 01:47 PM
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CONNECTICUT
HARTFORD

http://www.thinkadvisor.com/2017/10/...paign=10272017

Quote:
Connecticut Lawmakers Approve Budget That Rescues Hartford
About half of the city’s property is tax-exempt
Spoiler:
Connecticut lawmakers ended a four-month impasse over the budget by approving steps to close the state’s $3.5 billion deficit and provide nearly $50 million keep Hartford from collapsing into bankruptcy.

The House of Representatives and the Senate both passed the spending bill Thursday with enough support to ensure it won’t be struck down by Gov. Dannel Malloy.

The plan closes the deficit in part by eliminating sales-tax transfers to a municipal aid fund, raising hospital taxes and reducing earned income tax credits for the poor. It also extends a financial rescue to the state capital, Hartford, whose mayor has said it could be forced to seek bankruptcy as soon as next month if the state didn’t provide such help. The budget would give the city as much as $48 million a year, enough to cover almost all of its deficit.

“We provide stabilization for the capital city of Hartford, avoiding, I pray, a bankruptcy that will reverberate well beyond the city," said Sen. John Fonfara, a Democrat who represents parts of Hartford.

The rescue plan, which was cobbled together last week, has pushed up the price of Hartford bonds, with securities due in 2023 rising to an average of 83 cents on the dollar over the last two days from as little as 67 cents earlier this month. That pared the losses that came after Mayor Luke Bronin raised the specter of a potential bankruptcy and credit-rating companies cut its debt deeper into junk because of the risk of a default.

If Hartford went bankrupt, it would be the biggest U.S. city to do so since Detroit’s collapse four years ago. Hartford, where a third of its 123,000 residents live in poverty, faces a $50 million deficit, nearly 10% of its budget. The shortfall is projected to rise to $83 million by 2023.

“We wish to express our sincere thanks to the legislative leaders of both political parties, who came together across party lines and embraced a responsible, collaborative approach," Bronin, Treasurer Adam Cloud and City Council President Thomas "TJ" Clarke II said in a joint statement.

“We cautioned against a short-term fix or Band-Aid, and our legislative leaders agreed, providing tools that make a sustainable solution possible."

The city will work with its "stakeholders" to stabilize and revitalize Hartford, they said.

In a statement shortly after the vote, the governor’s office said a review of the legislature’s budget had “already uncovered egregious problems" with the hospital tax that could put the spending plan out of balance by more than $1 billion.

“Staff will continue to analyze the bill, weighing its merits and faults, so that the governor can arrive at an informed and carefully considered decision regarding his support," said Kelly Donnelly, a spokeswoman for Malloy.

The budget would lend the state’s backing for a refinancing of Hartford’s debt and provide $20 million annually to cover interest payments. Refinancing some of the city’s $620 million debt would allow it to avoid a spike in interest and principal payments starting in 2021 by extending maturity dates on the securities. The budget also creates a $28 million restructuring fund that Hartford could tap.

In an effort to deter Hartford from filing for bankruptcy, a step that would have to be approved by the state, the budget prohibits Connecticut from providing debt service assistance to any municipality that does so.

Assured Guaranty Ltd. and Build America Mutual Assurance Co., which insure more than half of Hartford’s bonds, have offered to assist the city by guaranteeing a refinancing. Local insurance companies Hartford Financial Services Group Inc., Travelers Cos. and Aetna Inc. have pledged to give the city $10 million a year for five years as part of a “comprehensive and sustainable solution for Hartford."

Connecticut has previously lent its commitment to pay debt service to a parking garage, convention center and science museum in Hartford. The state is rated A1 by Moody’s and A+ by S&P Global Ratings and Fitch Ratings.

The state aid package won’t be a "cure all" for the capital, said Tim Heaney, senior managing director at Newfleet Asset Management in Hartford, which does not own the city’s debt.

"I don’t think $40 million is enough to wipe all their problems away," Heaney said.

Hartford’s problems partly lie in its revenue structure, he said. About half of property is tax-exempt, and changing that would be contentious, he said. "If the state were to alter that payment process, then would the state do that for other cities?" he said.

Connecticut’s aid to Hartford comes with strings attached. The budget would also establish a Municipal Accountability Review Board composed of representatives of the governor, the treasurer and labor that would have the power to review Hartford’s budgets, bond issues and collective bargaining agreements.

“Hartford’s got to know, this is your shot — don’t screw it up," said Republican Senate Pro Tem Len Fasano.
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Old 11-03-2017, 04:38 PM
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CONNECTICUT

http://www.governing.com/topics/fina...lief-bond.html

Quote:
The Week in Public Finance: The Cost of the Opioid Epidemic, Connecticut's Budget and a Disaster Relief Bond
A roundup of money (and other) news governments can use.
Spoiler:

.....
Connecticut Ends Budget Standoff

After operating for 123 days without one, Connecticut finally has a budget. Gov. Dannel Malloy this week signed a two-year, $41.3 billion state budget bill that ends the longest stalemate in the state’s history.

The bipartisan bill has a little something for everyone. It fully funds state pensions, restores many of the cuts to the state university system, creates a new educational cost-sharing formula that provides money to all 169 cities and towns, and contains spending restrictions such as a constitutional spending cap on expenses and a bonding cap on construction projects.

The budget also ends speculation -- for now -- about a potential Hartford bankruptcy by providing an additional $40 million in state aid to the struggling city.

The Takeaway: Connecticut’s municipalities were left extremely vulnerable without a state budget, so having certainty for the remainder of the fiscal year is welcome news. Most important, the new budget does not pass on the annual $400 million cost of teacher pensions to municipalities, as had been threatened.

But it still leaves most cities with some kind of loss, as virtually all local governments will see some reductions in state aid. Only a few -- those with the greatest economic challenges -- will see flat year-over-year state aid. It's an open question, though, whether the state will be able to fully make good on its promised aid amounts in the first place. “Since new state revenue measures would have less than a year to be collected," S&P Global Ratings notes, "this may leave the state without the available resources to fully appropriate for these intergovernmental revenues."

Hartford Mayor Luke Bronin called the budget a “sustainable solution” because, in addition to helping the city with its immediate cash flow problem, the document provides the city with a path to avoid Chapter 9 bankruptcy by calling for concessions from city employees and bondholders. Moody’s Investors Service, which earlier this month had warned Hartford could soon default on its debt, says that particular danger has been avoided for now. “However,” says analyst Nick Lehman, “Hartford continues to have very high credit risk with significant long-term structural issues that need to be addressed.”
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Old 11-06-2017, 03:29 PM
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CONNECTICUT

https://www.bloomberg.com/news/artic...o-connecticuts

Quote:
Greenwich Riches, Bridgeport Woes Tell Tale of Two Connecticuts
Spoiler:
The Chinese delegation wanted to know how it could duplicate the success of hedge-fund mecca Greenwich, Connecticut.

The visitors asked: What is the wealthiest state in America doing to foster the industry that earned the region its “Gold Coast” nickname?

“After we’re all done laughing, we tell them the truth,’’ said Bruce McGuire, founder of the Connecticut Hedge Fund Association. “They haven’t done anything. They’re actually thinking about how they can kick us all out of town.”

Connecticut finds itself in a bind. The state has long loomed large in the national imagination as a playground on the Long Island Sound where people play polo and sail. The state is home to 400 private investment funds, according to McGuire’s group, including AQR Capital, run by Clifford Asness, and Raymond Dalio’s Bridgewater Associates Inc. Visions persist of horsey Martha Stewart suburbs. Less advertised are its impoverished cities and swelling budget deficits.

In the state that boasts America’s highest per-capita income, the cost of living is elevated, people and businesses are moving out and the state-employee pension system is underfunded by more than $34 billion, according to data compiled by Bloomberg. Its capital, Hartford, needed a state bailout last month to skirt bankruptcy.

In China, the government is building “fund towns” and offering tax breaks to attract money managers and boost the financial industry. In Connecticut, the legislature considered a 19 percent tax hike on investment gains as a way to close a federal loophole on so-called carried interest. Proponents saw it as a way to narrow the second-widest wealth disparity in the country. Critics said it was a tacit invitation for tax-burdened hedge-fund firms to bolt.

Stalwarts Flee

The threat that one of the state’s most successful industries could leave isn’t an empty one. Paul Tudor Jones of Tudor Investment Corp. left the state for Florida, a lower-tax state, in 2016, according to a residence filing in Palm Beach County.

Aetna Inc. and General Electric Co., once Connecticut stalwarts, have also fled. In a statement at the time of its announcement, the insurance giant said it needed to relocate headquarters to attract “knowledge economy” talent.

So concerned was the state that Bridgewater would skip town that Dalio’s firm received a $22 million state tax break in 2016 to stay in Connecticut.

It’s not only companies that are departing. Last year, 8,000 more people left than moved in, a percentage decrease topped only by Illinois, West Virginia and Puerto Rico.

The exodus and Wall Street’s fluctuations have translated into uneven revenue. Last year, Connecticut collected $18.2 billion, more than the prior two years, but significantly less than the $20.1 billion it took in during the 2013 fiscal year. Meanwhile, fixed costs, like pension payments, remain high.

Aid Cuts

Taxes haven’t closed the gap, leading to infighting about how much state aid could be cut. Disagreements over how to pay for a two-year budget deficit of $3.5 billion erupted into a four-month-long political stalemate that threatened Hartford with bankruptcy. The city narrowly avoided that fate after lawmakers passed a state budget that provided a lifeline.

With the increasing fiscal problems, it’s not only masters of the universe threatened by the political turmoil and lagging economy.

“Manufacturing in the state of Connecticut has always been difficult due to the high cost of living, but the recent budget discussions have only exacerbated the issue,” said Cyndi Zoldy, executive director of the Smaller Manufacturers Association of Connecticut Inc.

Her group represents more than 160 companies, mainly in the Watertown area, that make small goods to be used in larger manufacturing processes, including in the state’s aerospace and defense industries. One of the biggest challenges these companies face, according to Zoldy, is the difficulty attracting young employees to replace aging workers.

Cost of Living

It’s a familiar problem for many states, but Connecticut has to contend with one of the highest costs of living in the country, which makes it difficult to attract or keep millennials. The median price of homes sold in the state is almost $250,000, according to Zillow, compared with $170,000 in Texas, one of the country’s fastest-growing states.

For Sabrina Beck, that challenge has resulted in a five-year-long vacancy for a managerial position at Altek Electronics Inc., her family-run manufacturing company based in Torrington. The company employs 185 people and assembles smaller electronic parts for customers such as Otis Elevator Co. and Hologic Inc., a medical-instrument manufacturer.

She said the company would never consider leaving the state because it’s a family-owned business, but she said she worries about the long-term viability of the firm due to competition with low-cost manufacturers abroad.

“Connecticut does need to do some creative things in order to bring in more technology and business, and retain the brain power we generate through our wonderful schools,” she said. “We do have a lot of assets that give us great potential for the future. We just need someone to harness them.”

Other Connecticut

While Greenwich exemplifies the tony Connecticut, cities such as New Haven, Hartford and Bridgeport are a different Connecticut as they grapple with failing neighborhoods and a shortage of government investment.

Bridgeport Mayor Joseph Ganim said that part of his city’s financial trouble stems from having to finance services, like the courthouse and a large hospital, for all of Fairfield County, which has far wealthier towns like Greenwich. The city relies on the state’s help, he said, but it could do more.

“If we’re going to do better, we need to do better for our urban centers,” Ganim said. “Dollars are falling less on the big cities who have to service some of the most vulnerable and the most needy.”

As politicians contend with those issues, McGuire said he believes that the hedge-fund industry is a convenient scapegoat for economic decline.

“I was trying to understand the mindset of why they’ve decided that hedge funds are the enemy, that we’ve caused these problems,” he said. “We didn’t cause GE to move away. We didn’t cause the manufacturing sector to move out of Connecticut. We’re not whispering in the ears of the insurance industry telling them to move to Iowa. We’re actually still living and working here.”
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