What [Mayor Luke Bronin] walked into was a city that has run out of options.
Predecessors used refinancing gimmicks to balance recent budgets, and Bronin now faces several years of sharply escalating payments on the city’s debt. Squeezing more money out of the property tax is unlikely: Slightly more than half the property in Hartford, the home to three major regional hospitals and state government, is tax-exempt, and the city’s tax rate already is the state’s highest.
Bronin has proposed an 11 percent increase in the city’s $552.9 million budget, with debt service accounting for nearly half the $60 million increase. Health care, pension, payroll and legal costs represent most of the rest. He needs more than $40 million in aid from the state, a request landing on Malloy’s desk as state tax receipts are hundreds of millions of dollars off projections.
Malloy proposed allowing cities to apply the property tax to hospitals, giving them a significant and stable new source of revenue. The cities now get payments in lieu of taxes from the state, but they do not fully reimburse cities for tax-exempt properties — and the payments often shrink in bad times.
The hospital plan failed to win significant support in the General Assembly.
On Wednesday, Malloy said Connecticut’s cities are at a tipping point.
Bronin declines to say when the city would face its first default on debt payments, a potential trigger for bankruptcy.