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Hartford Connecticut. Greenberg Traurig LLP and Rothschild & Co. are getting folks up to speed quickly. Interesting quote which, to us, reflects a deep-ridden skepticism: "'Very honestly, we need honesty from you people,” she said. “And I will gladly pay you — well, the city will gladly pay you — $1,400 an hour for you guys to tell us the truth.'”
Everyone focuses on the disruptive force of technology but, sometimes, the most disruptive maelstrom is human nature. And nothing brings out the worst in human nature like politics. And political dogma often results in bad decision-making and fiscal irresponsibility. And all of that has already happened. Like before driverless cards dominate streets and drones deliver packages. Parking meter and parking lot revenue will decline and budgets will be challenged. Local legislators will have no idea what hit em. To confront this imminent and somewhat-scary future, maybe the best course for municipalities is to shun alleged stigma and rewrite the script. Like by getting rid of legacy liabilities and having a clean slate. Apropos, some think that bankruptcy is the best course for Hartford to move forward. It may be the only way it's ready for the next onslaught.
Things are getting real.
Unsustainable Pension Obligations + Mass Exodus (Aetna OUT, General Electric OUT) + Massive Municipal debt + Busted Hedge Funds and Corresponding Loss of Tax Revenue + Increased Taxes = a total sh*tshow of a situation in Connecticut. Meanwhile, Hartford hangs on by a thread. Now, the budget-less state seeks to impose new sales taxes and cigarette taxes to close the gap. Nothing like a tax on those who can least afford it. Also, short Altria and Philip Morris.
The tax-them-and-they'll-leave argument is mentioned a lot by pundits. It seems, in Connecticut at least, that there is some truth to it...
The City of Hartford Connecticut has hired Nancy Mitchell ofGreenberg Traurig LLP to help it navigate its options, including a potential Chapter 9 filing. The city has $672mm of debt (excluding a $70mm guarantee of the local minor league baseball team stadium (W.T.F.)). The city's bonds have traded up (enter distressed investors here) and the state is considering a 60 bps sales tax increase. Why has all of this happened? This has some good information and, we might add, it definitely does NOT serve as solid PR for finance recruiters. Meanwhile, Illinois finally passed a budget - over the governor's veto.
Hartford officials are turning over rocks looking for loose change at this point as they try and plug a projected $40mm budget shortfall. Anyone know which law firm they've hired for the inevitable Chapter 9? If so, email us! Speaking of bad municipal situations, it looks like Dallas and Houston will get a temporary reprieve financed on the back of pensioners. At least there is some sensibility being baked into "return" assumptions. We bet the numbers will still be way off. They always are.