Local government – Connecticut – Financially strained municipalities face continuing fiscal challenges

Source: Lauren Von Bargen, Thomas Jacobs, Leonard Jones, Joseph Manoleas, Moody’s, Sector In-Depth, February 11, 2019
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Cities and towns in Connecticut have faced several credit challenges in recent years, including negative demographic trends such as aging population and limited labor force growth, anemic economic expansion and modest tax base increases. For some municipalities, these issues are compounded by limited operating flexibility due to elevated tax rates and high fixed costs per capita. To counter these obstacles, local governments have turned to short-term fixes, including funding pensions at less than required levels and using fund balance to fill budget gaps, but such tools will not be sustainable over the long run. This report focuses on seven financially strained municipalities— Bridgeport (Baa1 stable), Hamden (Baa2 negative), Hartford (B2 stable), New Britain (Baa2 stable), New Haven (Baa1 negative), Waterbury (A2 stable) and West Haven (Baa3 negative)— and outlines the economic, revenue and expenditure challenges they face as well as the tools they use to manage budgetary pressures. The wide range of ratings reflects differences in local economic trends, debt and fixed cost burdens and current financial positions, among other factors…..