HARTFORD, Conn. — Connecticut's Municipal Accountability Review Board on Monday approved new conditions on Hartford's plan to borrow $50 million for road, sidewalk and vehicle needs, requiring the city to keep balanced budgets and not use the borrowed money to close budget gaps while the Hartford Board of Education faces a projected $35 million shortfall.

The plan includes $25 million in bonds and $25 million in equipment financing. It is the first time since Hartford's near-bankruptcy in 2017 that the city has sought to issue bonds for anything other than refinancing old debt, Hartford Business Journal reported.

The board, known as MARB, oversees the city's finances under the state's bailout agreement. It approved an earlier set of conditions in March. The new conditions, worked out by the state Office of Policy and Management and the state treasurer's office, passed on a voice vote with no one opposed at a special meeting held remotely.

What the city must do

Under the conditions read at the meeting, Hartford must:

• Keep a balanced budget every year it remains under MARB oversight and the new debt is outstanding, and not use bond or equipment-financing money to balance the budget.
• Show the board each year what it will cost to repay the $50 million, and confirm in writing that it can make those payments without putting its other obligations at risk.
• Report any city deficit to the board within 30 days, with a plan to fix it, and send monthly cash-flow projections until the gap is closed.
• Notify the state budget secretary and the treasurer as soon as it learns of a school-budget shortfall in fiscal 2028 or later.
• Work with the Board of Education and the State Department of Education on a fiscal intervention and oversight plan for the school district.

The conditions also require that the school board apply for that intervention process, created by a law passed this year.

School deficit unresolved

A board member asked whether the city would borrow before the school district's $35 million shortfall for the current fiscal year is resolved. The board's chair, the state budget secretary, said the conditions look forward. He said he did not expect the full gap to be closed before the bonds are sold and that a final resolution likely won't come until the end of the fiscal year.

Another member noted a letter from a school board member that again raised concerns about structural problems in the district's budget.

Mayor Arunan Arulampalam said the city raised its property tax rate this year to put more money into the schools, which he called a painful decision for a city that already has the state's highest mill rate. He said his administration has added more money to the school budget than the previous two administrations combined, but that the city can't fix what the superintendent has called a structural deficit by itself.

"These challenges can't be unwound by the city alone," Arulampalam said. He said he welcomed the state taking a closer role.

'Scotch tape'

Arulampalam said the borrowing is urgent because the city has gone about a decade without investing in its infrastructure. He described deteriorating roads and sidewalks and rusted lampposts that he worries could fall on people.

He said six new trucks have been built and the city hopes to buy them soon, and that without them it "will not be able to get through this winter unscathed." Only six of the city's 20 garbage trucks are working, he said, and trash collection falls behind almost every week.

"The city has been holding itself together with Scotch tape for far too long," he said. He added that he thinks the city can work with the conditions.

An official with the State Department of Education told the board that the department received all of the school district's application materials by Oct. 19 and is reviewing them with the Office of Policy and Management. She said a plan will go to MARB once it is complete.

The board's next regular meeting is Dec. 10.