Why Is Hartford Struggling?

It’s Not Just Untaxed Property

Every struggling place has a story about why they’re struggling; about how they got screwed over. Given that struggling places are sort of my thing, I’m familiar with those stories, and generally sympathetic to them. Usually, people who feel screwed over have actually been screwed over. The problem is, getting unscrewed is never as simple as changing that One Weird Thing that messed up the future for you way back in 1973. You can’t undo the past; it goes beside you into the future.

With that in mind, the Wall Street Journal had an interesting piece yesterday discussing the serious financial troubles of Hartford, Connecticut. They ably laid out key issues facing the city, not least among them the high density of untaxed property in the city thanks to many government, educational, or religious institutions. My suspicion is that every state capital faces similar problems, as does the District of Columbia. Yet not every state capital is facing critically poor finances. Even DC is doing well these days, well enough that they’ve been cutting taxes. So why is Hartford struggling?

The answer is a topic only briefly touched on by the WSJ: population decline!

Here’s the population of Hartford vs. DC, indexed to their peak populations:

Notice anything? Because I do!

I notice that Hartford’s decline has been less severe than DC’s, which corresponds to DC in the 1990s being probably a worse place to live than Hartford today. Meanwhile, DC has recently posted dramatic population growth, while Hartford continues to experience population declines. Declining population makes it harder to sustain any given fiscal burden. This isn’t just a story about lots of untaxed property (every major government hub has that), it’s a story of demographic decline, and that decline is likely to spread.

Here’s population for several municipalities in Hartford County. WSJ discusses a few of them, suggesting they are healthier.

As you can see, many municipalities have experienced low growth, or even decline, in recent years. The “rest of county” segment has risen pretty strongly in most years, but in 2016, even that declined. This “rest of county” designation does indeed reflect growth outside of the biggest towns and cities, by the way. The fastest growth from 2010–2016 was in Simsbury (24k), Burlington (9.6k), Berlin (20k), and Rocky Hill (20k). The slowest growth was in East Hartford (50k), Wethersfield (26k), Hartford City (123k), New Britain (72k), Suffield (15k), and West Hartford (62k).

Of course, none of this is a terribly great surprise. Hartford County is losing people. After slow growth from 1970 to the peak population in 2013 of 898,000, the county has declined to 892,000 residents. No surprise, then, that there’s population loss in lots of big places, and no surprise that some localities are experiencing financial trouble. That’s as you’d expect.

But with population declining in numerous localities, this trend won’t slow. Hartford’s economic engine, its government, is not going to be a bigger driver in the future because, well…

See that dip at the end there? That’s a 19,000 person statewide population decline. There’s not really any reason to think that’s going to make a huge turnaround in the near future either. The best they might eke out is population stability, but continued decline is likely. That means that Connecticut’s government is unlikely to face the need or ability to hire lots more people: indeed, if this trend continues, Connecticut could show as much as a 30,000 person population decline from the 2010 to 2020 Census. By 2026, 10 years from the most recent data, population could be 3.51 million, or about 65,000 people less than the 2016 estimate.

Now, the impact on state finances is more ambiguous. If population decline is among children, then it could help state finances: less educational spending compared to more earners. But as the workforce shrinks, the state budget will start to feel the hit. In other words, Hartford’s local finance problems are likely just the foretaste of what will eventually become statewide finance problems, especially as more and more localities come under pressure and seek state support.