Attorney General's Opinion
Attorney General, Richard Blumenthal
January 14, 1991
The Honorable Francisco L. Borges
State Treasurer
55 Elm Street
Hartford, CT 06106
Dear Mr. Borges:
As Chairman of the Bridgeport Financial Review Board ("the Board"), you requested my opinion on the legal authority of the City of Bridgeport to file for relief under Chapter 9 of the Bankruptcy code without the approval of the Board. Members of my staff have reviewed the applicable provisions of the Bankruptcy Code and, particularly, the Board's enabling legislation, 1988 Conn. Spec. Acts No. 88-80, as amended by 1989 Conn. Spec. Acts Nos. 89-24 and 89-47 and 1990 Conn. Spec. Acts No. 90-31 (collectively, "the Act"). The purpose of this letter is to confirm my prior oral advice that, even if the circumstances warranted, and we are assured that they do not, the Act would prevent the City of Bridgeport from seeking relief under the Bankruptcy Code without the permission of the State.
The Bankruptcy Code does not limit or impair the authority of the states to control the political or governmental powers of their municipalities including expenditures. 11 U.S.C. [903, 4 Collier on Bankruptcy] 903 (15th ed. 1984). In this regard, there is no express authority in the laws of this state for the City of Bridgeport to file for relief under the Bankruptcy Code, and the mandate given to the Board by the General Assembly preempts any implied authority for the City to do so.
The General Assembly provided for the creation of the Board as follows:
It is hereby found and declared that a financial emergency exists in the town and city of Bridgeport, that the continued existence of this financial emergency is detrimental to the general welfare of the city and the state, that the town and city's continued ability to borrow in the public credit markets and the resolution of this financial emergency is a matter of paramount public interest and that to achieve this resolution it is necessary, appropriate and an essential public purpose to provide in t his act for the financing of deficits resulting from the city's operations, the imposition of financial management controls and the creation of the Bridgeport financial review board for review the financial affairs of the town and city of Bridgeport, all in order to maintain access to public credit markets, to fund the city's accumulated deficits and to restore financial stability to the town and city of Bridgeport.
1988 Conn. Spec. Acts No. 88-80 ] 1 (emphasis added).
In order to deal with the financial emergency, the Board was given specific power not only to review the financial condition of the City but also to approve its annual budget. Moreover, if the Board rejects any budget tendered by the City it may create a new one which meets the requirement s of the Act. 1990 Conn. Spec. Acts No. 90-31, ]) 7 and 8.
It is axiomatic that statutes must be construed so as to give effect to the intent of the legislature. State of Connecticut v. Parmalee, 1987 Conn. 158, 161 (1985). Indeed, the primary rule of statutory construction is to ascertain and give effect to the intent of the legislature. Beloff v. Progressive Casualty Ins. Co., 203 Conn., 45, 54 (1987).
The General Assembly's recognition of the financial emergency in the City of Bridgeport and the specific powers given to the Board in the Act to control its finances preclude any authority in the City to seek bankruptcy. Accordingly, I reaffirm my prior advice that the City of Bridgeport lacks the power to file for relief under the Bankruptcy Code.
Very truly yours,
RICHARD BLUMENTHAL
ATTORNEY GENERAL
RB/JGH/bjg
cc: William J. Cibes, Jr., Secretary, OPM
Donald Kirshbaum, Executive Director, Bridgeport
Financial Review Board
Sally Rutherford, Vice President, Standard & Poor's
Joan Dougherty, Vice President, Moody's Investor Services