Posted on 10/19/2017 9:36:34 AM PDT by matt04
Moody’s Investor Service issued a dire warning to lenders Thursday: Hartford will likely default on its debt by November and, if the city does not change course, will run up annual deficits exceeding $60 million through the next twenty years.
On Sept. 26, Moody’s downgraded the city’s bond rating to Caa3 from Caa1, reflecting the investor service’s belief that “in the likely event of a default, bondholder recovery will be 65%-80% of principal,” it stated Thursday.
Moody’s projects 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 service.
“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.”
Moody’s 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 read. 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 the General Assembly craft legislation that would open up the arbitration process and allow municipalities to renegotiate contracts.
(Excerpt) Read more at courant.com ...
If some more tax increases don't work, maybe a new busway and another minor league venue will fix all their problems.
President Hillary and the new Democrat Senate will bail them out, oh...
Hmmm, Democrat Legislature, Democrat Governor, Democrat-appointed Judiciary - what could possibly go wrong?
sarc/
Maybe they can borrow some money from Puerto Rico.
Sanctuary city—the bondholders need to say “no”.
Quick Google search revels that Caa3 is defined as: “Default imminent with little prospect for recovery.”
In addition to the current liabilities, thank goodness they don’t have an NFL stadium to support..
2banana’s Rule:
Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy
The real solution for Hartford’s comeback:
1. Declare bankruptcy
2. Tear up all public union contracts and pensions
3. Ban all public unions
4. Throw corrupt democrat leaders in jail
5. Cut taxes to the bone
6. Watch city grow and blossom as working people and businesses flock there
States can’t legally declare bankruptcy - not sure if cities can not either.
Anyway - we NEED government bankruptcy / default.
There will be no change otherwise.
For anyone curious, Hartford’s 2018 budget runs to $613 million.
“States can’t legally declare bankruptcy - not sure if cities can not either.”
Cities can and do declare bankruptcy. We’ve had several major cities here in CA go under. And they have had Bankruptcy Court sanctions that would have allowed them to give union contracts and PE pensions haircuts, but it each case thus far, they have somehow managed to exit bankruptcy without so doing. Stockton and Vallejo are examples. The open question is did they really fix their financial problems, or once again find a way to kick the can down the road? My bet is that they didn’t really fix anything, and that they will be back in bankruptcy again very soon, because in both cases, the city governments took the side of their employees instead of their taxpayers. Until governments become instruments to serve the taxpayers at reasonable costs instead of being jobs programs for “union DemoRATS,” there will be no real solutions.
I agree 110%, however the Dem leaders will do everything they can to save face and avoid it as long as possible, thus making the problem worse.
While Hartford is not in the same situation as Detroit, their bankruptcy has at least given them a chance to improve. Before bankruptcy they had soda cans as alarm bells in fire stations, beat up an unreliable fire trucks, police cars and ambulances. Now they have or are in the process of replacing most, if not all of their fleet so that if you need a engine or ladder the one that shows up can actually pump or raise the stick. There was a time when the Chief would have to specify they needed a ladder truck with working ladder, engine with a working pump, etc. to the scene or just the unit for hand tools/manpower.
Just raise taxes. Voila. Problem solved.
“Caa3” looks like “C+” and means “F”. :)
The only way to make it viable, might be to end all support for welfare there, so as to force all the welfare recipients to move elsewhere.
> Just raise taxes. Voila. Problem solved. <
Don’t be silly. Raising taxes is only half the solution. Back in January of this year Hartford declared itself to be a sanctuary city. Hartford needs to advertise this fact.
High taxes + illegal immigrants. Yep, that’s the ticket.
This is a big issue here in NJ, where the Dem candidate for governor criticizes the fact that we’ve been downgraded several times during Christie’s reign. Christie was one of the first to highlight the problem, and the Dem’s unspoken message is that he’ll tax the heck out of us to deal with the debt (he has already admitted he’ll raise taxes). The fact that he seems to be leading in the race shows how NJ is determined to follow CA and IL into financial ruin; it is even worse off than CA because it is very easy to circumvent a small state like NJ to get anything done. For example, when another Dem governor wanted to charge for saltwater fishing licenses, it only died when it became clear that people could easily fish from neighboring states instead - and this included NJ fishermen themselves.
I guess I should have put a sarcasm tag on my comment. :>)
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