The historic headquarters of insurance giants like Aetna, and Cigna, Hartford Connecticut now faces a potential financial catastrophe.
On Thursday, October 19, it was announce that the likelihood of Hartford Connecticut, to meet its obligations for the month grows continually bleak. Moody’s has produced a press release stating their position that Hartford Connecticut is likely to default by month’s end.
"Our analysis projects operating deficits of $60 million to $80 million per year through 2036, the final maturity of its general obligation debt," says Nicholas Lehman, a Moody's AVP. "Fixed costs — including pension contributions, benefits and insurance, and debt service — are driving large projected operating deficits of approximately 11% of revenues."
The city has a credit rating of Caa3 negative. There is the expectation that the state will need to step in and save the ailing city from continual defaults. This remains an unlikely event considering that Connecticut is the only state in the country to operate without a budget passed by lawmakers. Connecticut Gov. Dannel Malloy struggles to confront a 3.5 billion two year deficit.
All of this spells a dizzying crisis that has little chance of being resolved without deep cuts being made to Hartford's budget. In order for this to transpire, there would need to be concessions made by union groups.
“Though the city has reduced its labor force, contractual salary increases and employee benefits are significant contributors to its long-term structural imbalance.”
Moody’s suggest that the state craft legislation that would permit municipalities to enter arbitration for the renegotiation of government employee crisis. Such a bold step would be a determined effort in the right direction to stave off Hartford’s in pending fiscal crisis.