Major change made to CT financial oversight of Hartford finances, “significant challenges” remain

HARTFORD — Six years after teetering on near bankruptcy, the oversight of the city of Hartford‘s finances by a state review board was eased significantly Tuesday, its members agreeing Hartford had made significant progress in turning around its fiscal woes.

Hartford Mayor Luke Bronin asked the Municipal Accountability Review Board, which has overseen city budgets and contracts since 2018, to drop the review level to a lower tier. That means the review board, known as MARB, will continue to be involved with oversight of city finances, although at a less stringent level.

The road to improved financial health for the city stretches back almost as far as when Bronin first took office in 2016. Along the way, there was a state bailout that provides about $40 million annually over 20 years to pay off hundreds of millions in debt; concessions from the city’s labor unions and $50 million spread out over five years from three major corporate employers in the city: Travelers Cos., the Hartford Financial Services Group and Aetna Inc.

“We have budgeted with rigor and care and discipline, and I think that is reflected in multiple years of surplus as well as the improving fund balance and continued positive outlook,” Bronin told the board’s members Tuesday in a meeting at the Legislative Office Building. “I want to stress as I’ve said many times publicly, and in this forum, that our progress is very real and also fragile. I think it needs to be protected and defended with similar rigor in the years going forward.”

Bronin, who is not running for another term in November, said MARB’s oversight is a healthy one, providing an independent review, “and I think that is good for the city because of the discipline it imposes.”

MARB’s members unanimously approved Bronin’s request Tuesday, with some praising the restraint of a step down from oversight, rather than a complete withdrawal.

“I also appreciate that it’s not just sort of a victory lap because there is still a lot of work to be done,” said Kevin Alvarez, deputy chief of staff and director of policy for State Treasurer Erick Russell. “I think this is a right and, sort of, prudent step in that direction.”

Alvarez, who was representing Russell at Tuesday’s meeting, echoed others in praising Bronin’s leadership but also the hard work of “the people of Harford and people in state government.”

The oversight board ranks municipalities based on their fiscal outlook. Tier one is the least serious, while a tier four ranking is the most dire. Hartford was classified as a tier three.

Bronin asked that the board drop the city’s oversight to a Tier 2. The city will still have submit monthly financial reports to MARB, as it does now, and submit key financial and budget assumptions. But the change means that labor contracts, contracts over $100,000 and other details will no longer have to be reviewed by the board.

In his letter letter to MARB seeking the change, Bronin ticked off a list of challenges the city still faces. The list includes long-term pension obligations; the “inadequacy of the city’s property tax base,” including a high percentage of non-taxable properties; and “the current threat to the value of commercial office buildings in the wake of the COVID-19 pandemic.”

The city also will have to file reports related to state bailout.

In late 2017, Hartford facing a $65 million deficit and escalating annual debt payments, sought MARB oversight and was one of the first municipalities to secure oversight by the newly-created review board.

That same year, the city’s financial situation was so precarious that Standard & Poor’s downgraded Hartford debt to junk bond status, reflecting the strong possibility that Hartford could default on its debt or be forced to renegotiate with bondholders to pay them less.

Two months ago, Moody’s Investors Services on Friday upgraded Hartford’s bond rating from Ba2 to Baa3, calling the city’s financial outlook positive.

Bronin often has pointed out that the city hasn’t taken on any additional debt since 2016.

Kenneth R. Gosselin can be reached at kgosselin@courant.com.