Hartford Moves Closer to Bankruptcy, Soliciting Proposals From Law Firms – Hartford Courant

City leaders have taken a step toward bankruptcy, soliciting proposals from law firms that specialize in Chapter 9, which protects financially strapped municipalities.

The city is reviewing several firms and could hire an attorney as early as this week, sources with knowledge of the plans said.

Mayor Luke Bronin has hinted for months that Hartford could file for bankruptcy, and said during his budget release in April that he was "not in a position to rule anything out." He could not immediately be reached for comment Tuesday.

Hartford faces a $65 million deficit next year and a $14 million shortfall this year. Bronin has proposed cuts and concessions from the unions, but is still seeking $40 million in additional state aid to close next year's budget gap. The city resorted to short-term borrowing to cover costs such as payroll payments this year.

Council President Thomas "TJ" Clarke II, who was briefed by Bronin on the prospect of hiring a bankruptcy lawyer, called the move premature.

"I was told it was possible that a decision would be made before the end of this week," Clarke said Tuesday. "It's premature. We haven't exhausted every option and every avenue for us to go down this road."

Bronin has stressed that the state must be a partner in pulling Hartford from the brink of financial ruin, noting that more than half of the city's properties are tax-exempt and that Hartford has limited options for revenue. But the state has its own problems, with a more than $2 billion budget gap estimated for next year and it is unclear whether there is support in the General Assembly for bailing out Hartford.

Talk of bankruptcy has fanned tensions between the mayor and city council. Several council members said they are against the approach, and have advocated for alternatives, such as taxes on nonprofits or the consolidation of services with Hartford's board of education. Clarke on Monday suggested a citywide hiring freeze, though new police officers and firefighters would be exempt.

Lawmakers from Hartford met with council members at the state's legislative office building Tuesday to discuss the city's dire outlook.

Councilwoman Cynthia Jennings asked for a review of how bankruptcy would affect the region.

"We don't need a summary or a study," House Majority Leader Matthew Ritter, D-Hartford, replied. "Hartford going bankrupt would be the most catastrophic financial thing that ever happened in the state of Connecticut."

Ritter said legislators are trying to rally support for Hartford.

"We will try everything in our power to hit the $40 million target," he said. "It keeps us up at night as much as it keeps you up at night and going bankrupt would be terrible for the city. It would be terrible for the state. It's not something that any of us want to see and we're going to work very hard to make sure it doesn't happen."

Clarke said that if the city proceeds with hiring an attorney, the council will look to retain its own lawyer. A key question members want answered is whether the mayor must get the council's approval to file for bankruptcy.

The state statute covering municipal bankruptcy says that a city or town must receive consent from the governor, and that the governor "shall submit a report to the treasurer and the joint standing committee of the general assembly." It doesn't clarify whether a mayor needs the council's approval.

Hartford wouldn't be the first city in Connecticut to seek Chapter 9 protection. Bridgeport filed for bankruptcy in 1991, but a federal judge dismissed the petition, saying the city was capable of paying its bills.

Other cities that have filed include Detroit, Stockton and San Bernardino, Calif., and nearby Central Falls, R.I.

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Hartford Moves Closer to Bankruptcy, Soliciting Proposals From Law Firms - Hartford Courant