Attorney General: Hon. Joseph M. Suggs, Jr. , State Treasurer , 1993-012 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

June 14, 1993

Hon. Joseph M. Suggs, Jr.
State Treasurer
55 Elm Street
Hartford, CT 06106-1773

Dear Mr. Suggs:

In your letter of March 26, l993, you requested our opinion concerning perceived conflicts between the requirements of proposed House Bill 7114, "An Act to Assist Connecticut Communities Seeking Economic Stability" (the "Act"), and Article Tenth, Section 1 of the Connecticut Constitution which preserves home rule for Connecticut municipalities.

It is our opinion that the provisions of the proposed legislation do not conflict with or contravene home rule.

In Connecticut "the powers of a municipal corporation are wholly statutory." Sheehan v. Altschuler, 148 Conn. 517, 526, 172 A.2d 897, 901 (l961). The legislature's authority to pass statutes concerning municipal power is limited by Article Tenth, Section 1 of the Connecticut Constitution, which generally prohibits the enactment of special, and not general, legislation concerning municipalities. Conn. Const. art. X, e 1. Special legislation, generally, is legislation that is "made for individual cases or for particular places or districts...." Black's Law Dictionary 1253 (5th ed. 1979).

Connecticut statutes, too, prohibit "special legislation relative to the powers, organization and form of any town, city, borough or other unit of local government unless requested by a town, city, borough or other unit of local government...." Conn. Gen. Stat. e 2-14. Special legislation is still permitted as to borrowing power, validating acts, and formation, consolidation, and dissolution of any town, city or borough where in the delegation of legislative authority by general law, the General Assembly failed to prescribe the powers necessary to effect the purpose of such special legislation. Conn. Const. art. X, e 1.

The home rule provisions of Article Tenth, Section 1 prohibit the state legislature only from regulating matters of purely local concern. Caufield v. Noble, 178 Conn. 81, 90-91, 420 A.2d 1160 (l979). "It does not follow from our constitutional commitment to home rule that the state legislature is thereby precluded from addressing problems of statewide concern...." Shelton v. Commissioner, 193 Conn. 506, 521, 479 A.2d 208, 216 (l984).

House Bill No. 7114 proposes to establish a program called ACCSES (Assisting Connecticut Communities Seeking Economic Stability) which will provide state credit enhancement to municipal bond issuers who are either unable to secure municipal bond insurance from any bond insurance company on reasonable terms and conditions or unable to access bond markets. Section 1(8) of the Act specifically excludes from its terms any municipal bonds authorized to be issued under Chapter 110 of the Connecticut General Statutes. House Bill 7114 authorizes municipalities to issue deficit obligations to fund a deficit, Section 9(a) and (b), provided that such municipality does so in the manner prescribed by regulations adopted under the Act.

Only municipalities that apply to the Secretary of the Office of Policy and Management for certification under the Act are subject to the terms of the Act. H.B. 7114, ee 14, 16, 19. Section 3 of the Act requires any municipality seeking assistance under the ACCSES bill to document that it has authorized the issuance of general obligations and established a property tax intercept procedure and a debt service payment fund under the Act in accordance with either its charter, a special act or home rule ordinance.

Since House Bill 7114 applies to any municipality in the state that needs assistance in issuing bonds, House Bill 7114 is general legislation which addresses "problems of statewide concern...." Shelton v. Commissioner, 193 Conn. at 521. Thus, the Act neither conflicts with nor infringes upon the statutory powers reserved to municipalities under Section 7-148 of the Connecticut General Statutes or with the home rule principles of Article Tenth, Section 1.

Section 7-148(c)(2)(I) empowers municipalities to "regulate the method of borrowing money for any purpose for which taxes may be levied and borrow on the faith and credit of the municipality for such general or special purposes and to such extent as is authorized by general statute." The provisions of House Bill 7114 provide just such general statutory authority by which municipalities may borrow by issuing deficit obligations.

Section 7 of the Act, which prohibits municipalities from filing "a petition to become a debtor under Chapter 9 of title 11 of the United States Code without the express prior written consent of the governor" and Section 13 of the Act, which bars any "certified municipality" from filing a debtor's petition under chapter 9, do not conflict with or contravene Connecticut's constitutional commitment to home rule. Although Section 109(c) of Chapter 9 of the Bankruptcy Code, 11 U.S.C. e 109(c), provides that an entity may be a debtor under Chapter 9 if it is a municipality and if it is "generally authorized to be a debtor under such chapter by State law," Chapter 9 "does not give a city rights and powers independent of the State." In re City of Bridgeport, Debtor, 128 B.R. 688, 692 (D. Conn. l991). "It is the state which must decide whether to empower its cities to file." Id.

House Bill 7114 makes it clear that Connecticut municipalities have no right to become debtors under Chapter 9. But because Section 903 of Chapter 9 expressly provides that it "does not limit or impair the power of a State to control, by legislation or otherwise, a municipality of or in such State in the exercise of the political or governmental powers of such municipality," the restriction of this municipal authority is the State's prerogative. Thus, general legislation may expressly deny municipalities the right to become debtors under Chapter 9 without clashing with home rule principles.

Very truly yours,

RICHARD BLUMENTHAL
ATTORNEY GENERAL

Anne O'Leary
Assistant Attorney General

RB/AO/bjg


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