This article originally appeared in the Hartford Courant.
As some legislators remain outraged over the controversial state bailout of Hartford, Senate Republican leader Len Fasano said Thursday that lawmakers are considering legislation to reverse the bailout to a more modest, two-year term.
Fasano said that he and other lawmakers believed they voted last year for a two-year, $40 million per year bailout to help the capital city avoid bankruptcy. But he was stunned when Gov. Dannel P. Malloy’s administration and the state treasurer signed a long-term, $550 million deal that would cover debt payments over two decades.
Fasano and others are now seeking a reversal on a bipartisan basis in the final three weeks of the legislative session that ends at midnight on May 9.
“I think there is a way to do that at this point,’’ Fasano told The Courant. “There is a way to do it bipartisanly. I do believe there is a way to do it.’’
While the final language is not ready, the new bill would clarify that the General Assembly wanted to help the capital city for two years only.
In a related move, the legislature’s finance committee recently removed $100 million for the XL Center in downtown Hartford that had been part of Malloy’s proposed capital improvement budget. House Speaker Joe Aresimowicz says the money for the XL Center will likely be debated again before the session ends, along with funding for a new, $16 million parking garage near the state Capitol.
Malloy declined to comment in detail Thursday when asked by The Courant about the XL Center cuts.
“It’s too early in the session to have that discussion,’’ Malloy said as he walked back to his Capitol office. “There’s so many hours and days to go forward. We don’t need to have that discussion yet. Don’t want to get into it.’’
Some legislators believe that money should be cut from Hartford in the future if the city receives $550 million over 20 years, instead of a short-term bailout.
“We’re going to take this one step at a time,’’ Fasano said. “The $100 million [for the XL Center] is off the table for now.’’
Fasano said that future funding would not be cut from the all-important education cost-sharing grant for public education.
“There are other PILOT monies and disbursements of that nature that after year three, they would be getting less,’’ Fasano said.
But State Treasurer Denise Nappier and the Malloy administration have strongly defended the deal, saying there is a legally binding agreement with the city of Hartford that was made possible by the legislation passed by the legislature.
Nappier wrote to lawmakers that the legislation “is clear’’ that she and state budget director Benjamin Barnes have “the authority to commit the state to pay all of a distressed municipality’s outstanding debt.’’
Nappier added, “the legislation recognized that contract assistance could cover debt payments that would extend beyond the biennium’’ and that the treasurer is authorized to make the payments.
Besides the bailout, the deal calls for “Hartford’s acceptance of fiscal oversight and restrictions on home rule,’’ Nappier said.
Deputy House Speaker Robert Godfrey, a Danbury Democrat, said he strongly opposes resolving the situation by cutting unrelated state money from the capital city.
“How petty!’’ Godfrey said. “What did the XL Center do that was wrong? That’s like one of your children did something wrong and you’re punishing the other one.’’
Godfrey, who voted against the budget last year, said that he, too, was unaware that the long-term deal for Hartford was included in the final version that was signed into law by Malloy on Halloween. He said he could not predict how the situation will be resolved.
But Bridgeport Mayor Joe Ganim questioned the deal, saying that other major cities also have major financial needs. He said that Bridgeport has $330 million in unpaid debt, plus interest, and the city receives $70 million less per year than Hartford in education funding. He says the Hartford bailout, with interest, is actually more than $750 million.
Ganim also had questions about stopping the Hartford deal.
“Is it fully authorized and has the funding been authorized in the budget?’’ Ganim asked. "There’s some question whether this is authorized. The legislative leadership in the Senate said, ‘We didn’t know about this.’ I think what people thought was what I thought — that Hartford was getting a $40 million bailout.’’
Another Democratic gubernatorial candidate, Ned Lamont, said that cutting money from the XL Center and other accounts would be a bad move.
“That is the worst of all possible ideas,’’ Lamont said Thursday. “It’s a bailout for Wall Street bondholders. The people of Hartford are going to take a hit, and the bondholders will be as happy as can be.’’
If he had been governor, Lamont said, “I think I would have given them a short-term fix, but I would not have given them 20 years.’’
Wall Street bondholders and credit ratings agencies have reacted positively to the moves.
“In taking charge of Hartford’s fiscal situation, the state is sending a clear message to the bond market that we will not turn our back on any municipality that is in financial crisis,’’ Nappier said. “Early signs indicate that credit rating agencies will view this action as ‘credit positive.’ ”
Fitch Ratings, a Wall Street agency, said it “views the reassigned Hartford debt service requirements as modest within the state's $18 billion annual budget, with no measurable change to carrying costs.’’ Fitch said it does not expect many communities to line up for state assistance because “no other municipality, aside from West Haven, has reported fiscal stress comparable to Hartford.’’
This article originally appeared in the Hartford Courant.