Chris Powell: As in Detroit and Central Falls, bankruptcy could finally make Hartford responsible

Constitution Plaza, in downtown Hartford.

Advocates of a financial bailout for Hartford city government warn that a bankruptcy filing by the city will be a "black eye" for Connecticut, as if the state isn't already mortified by the failure of Gov. Dan Malloy and the General Assembly to enact a budget three months into the new fiscal year.

But last week a series of investigative reports by Eric Parker of WFSB-TV3 in Hartford examined the recent municipal bankruptcy reorganizations in Detroit and Central Falls, R.I., and concluded that the cities have greatly improved as a result.

Hartford's situation is much like those in Detroit and Central Falls before their bankruptcies, with debt and pension obligations outpacing revenue. Indeed, the two federal judges who handled Detroit's bankruptcy reviewed Hartford's financial data and recommended bankruptcy. While Hartford's city government would lose authority during a bankruptcy, the Detroit judges suggested that Mayor Luke Bronin could be appointed the city's emergency manager, thereby preserving some democratic supervision in the process.

Detroit, which long had been losing population and was becoming a giant slum, dragging its suburbs down with it, began to revive at the moment of its bankruptcy filing, Parker reported. That's when businesses gained confidence that management of the city would become responsible. Downtown is prospering again and real estate values in the city and its suburbs have risen sharply.

Detroit's bondholders and bond insurers absorbed huge losses, pensioners smaller but still substantial loses. The blow to pensioners in Central Falls was harder. But there probably won't be much private-sector investment in Hartford until the city, which is not only broke but riddled with corruption and incompetence, is reorganized both financially and politically, and that can't be done without pain.

After all, just in the last few weeks former Hartford Mayor Eddie Perez pleaded guilty to bribery and a developer, James C. Duckett Jr., was convicted of defrauding the city of hundreds of thousands of dollars in the guise of building a soccer stadium. Of course, Hartford's new minor-league baseball stadium was completed last year at $30 million or so beyond its $50 million budget even as city government had become insolvent and had stopped maintaining its schools.

The $50 million Mayor Bronin wants in additional aid from state government so that the city might avoid bankruptcy -- and probably only postpone it -- would pass the bill for the stadium along to municipalities that are not quite as corrupt and incompetent as Hartford is.

Far from giving Connecticut another "black eye," bankruptcy for Hartford would restore virtue to the city's bondholders and unionized employees, who long have been operating as if the city will be rescued financially no matter how incompetent and corrupt it becomes. For the bondholders and unions have enough political influence to prevent incompetence and corruption. Instead the bondholders have been indifferent and the unions have encouraged city government to keep giving the store away, especially to themselves.  

Imagine how different Hartford might be if, instead of assuming that state government would underwrite its corruption and incompetence forever, the bondholders and the unions were compelled to audit city government constantly to maintain its fiscal responsibility, thereby insuring their bonds and pensions.

But while cities can file bankruptcy, states can't, and the way things are going, Connecticut state government soon may be little more than a pension and benefit society cannibalizing public services.


Chris Powell is managing editor of the Journal Inquirer, in Manchester, Conn.

 

Bankruptcy filing would be a basis for Providence resurgence

From Robert Whitcomb's Dec. 15 "Digital Diary'' in GoLocal24.com.

Ken Block, the systems analyst and formerRhode Island gubernatorial candidate, and Alan Hassenfeld, former CEO of Hasbro, are right to urge that Providence promptly be put into bankruptcy protection. (I have said for years that the city should do this.)

The city’s vast $1.9 billion liability for unfunded pensions and capacious retiree health benefits, and largely intransigent municipal unions, make it impossible for the city to dig itself out of its hole unless it goes into bankruptcy, with a  highly experienced, decisive and tough receiver appointed by a federal judge to make drastic and long-overdue changes.

The aforementioned liabilities can be blamed largely on  past mayors’ (especially the late, outstandingly corrupt  thug Vincent Cianci) sweetheart deals with labor unions in return for their political support,  and wishful thinking about, for instance, the rates of return possible for the city’s investments.

Paying for this immense debt eats up money that otherwise could go into better city services and lower taxes. Better services and lower taxes would, of course, make Providence much more attractive to taxpaying businesses and individuals that might consider moving to it. The city’ssuperb location, distinguished educational and other institutions (albeit too many of themofficially “nonprofit’’ and thus sharing little of  the tax burden) and many cultural charms would have drawn many businesses, large and small, over the past few decades if its fiscal condition had been healthy.

Providence is already effectively bankrupt. It’s past time to accept that and enter a fast and efficient bankruptcy process. Detroit has recently done just that and is now enjoying a revival. So has Central Falls. And Providence has much more going for it in the long run than Detroit, especially in  location and institutions. It’s embarrassing for politicians and residents in general to admit that their city is bankrupt, but energizing to know that bankruptcy can help shovel out the manure left by years of irresponsible governance.

Disinfecting Providence’s finances would, of course, be a big boost to all of Rhode Island, which is in many ways a city-state, and indeed to all of southeastern New England, of which Providence is the center.

Only 'the squirrel' is gone

  The interview on Rhode Island Public Radio last Friday was a vivid expression of Vincent Cianci's character. It was filled with lies, half-truths,  some good quips, historical revisionism, endless evasions, arrogance and industrial-strength narcissism as he tried to monopolize all the air time by talking over and interrupting his questioners.

The interview confirmed that the man, now 73, has not changed.  The ''squirrel'' on his head is gone, but he's the same old guy.  At least in the motor-mouth department, he has the energy of   a much younger man.

He constantly implies  that he  was the sole author of the "Providence Renaissance'' while that in fact was due to a national economic revival (which lasted more on than off from 1983-2007),  changing regional demographics, a new popularity  of medium-size and large cities with the sort of cultural institutions and location that Providence has and the efforts of such leaders as John Chafee, Bruce Sundlun, Lincoln Almond , designer Bill Warner and certain  local academic and business leaders.

Their work offset some of the destruction done by the corruption of Cianci and the crooks he placed in some key positions as he kept much of the ill-informed populace amused by his wisecracks (which can be heard from any number of tough Northeast pols; I heard variants of his jokes living in Brooklyn, Philadelphia and Boston over the years).

Plenty of cities revived from the mid-80's on, some with good bad mayors, some with crooks such  as Cianci. Technology, demographics, economic and cultural cycles and other factors play huge roles in the rise/fall/rise of all cities. We  tend to lazily  give to one person the credit or blame for all change n their jurisdictions,  be it the president in national and international matters or the mayor in local ones.

The news media, and the general population, just  can't seem to get away from the cult of personality.

So here we go again in Providence.

Meanwhile,  we fear that Mr. Cianci  plans massive giveaways to public employees of the sort that he pushed before.  No wonder he got the endorsements of the police, fire and teachers unions. (Note that many of their members do not live in Providence and so won't have to pay the bill for Mr. Cianci's promises.)

Can we look forward to more such Cianci-era  concoctions  as ''cost-of-living''  adjustments for public pensioners at three times the inflation rate and more early retirements? So in the end,  the amusing Dr. Daniel Harrop, the psychiatrist who is the Republican candidate for mayor, may be proven right: The city should go into bankruptcy and start all over again, a la Detroit.

The leadership of the police union, in particular, has humiliated its membership by endorsing a man who broke laws   that they are sworn to uphold and who presided over industrial-strength corruption in his police department. Not a great way to get the respect of the public.

-- Robert Whitcomb