BRIDGEPORT, Conn. -- A federal Bankruptcy Court Judge here yesterday rebuffed the state attorney general's request to move hearings on Bridgeport's Financial Review Board from federal court to state court.
According to documents submitted by U.S. Bankruptcy Court Judge Alan H.W. Shiff, hearings slated for tomorrow will proceed in his court as originally planned. The hearings will examine whether the 1988 legislation that established Bridgeport's review board effectively bars the city from filing a bankruptcy petition without the state's authorization.
Whether the board's existence is legitimate under the state's constitution -- an issue that has been raised -- may not be discussed at the hearings, according to an attorney at the Bridgeport-based law firm of Zeisler & Zeisler, which is advising the city in its bid for bankruptcy. But if the issue arises at a later date, it could still go before a state court.
The attorney also said questions over the board's constitutionality would be moot if the court finds that the review board legislation does not prevent the city from entering bankruptcy.
In a related incident, Connecticut Attorney General Richard Blumenthal has charged that in filing for protection under Chapter 9, Bridgeport Mayor Mary C. Moran violated not just state law, but the city's own charter.
Mayor Moran last night planned to meet with members of the city's common council, where she was expected to seek approval for her June 6 bankruptcy petition.
Mr. Blumenthal made his charges on Friday, when he filed an amendment to a motion for dismissal of the city's bankruptcy petition. The amendment charged that Mayor Moran had exceeded her powers under the city charter.
"The powers described therein," the legal brief says, "do not permit the mayor to take unilateral action respecting the finances of the city, including the filing of a bankruptcy petition."
Although the mayor asked for a vote of support at an emergency June 6 city council meeting, three aldermen were absent when the meeting began. Seven Democrats left the meeting after the mayor disclosed her intentions, leaving only half the city's elected representatives in attendance. The voted 9 to 1 to support Bridgeport's Chapter 9 filing.
The amendment charges that "at the time the vote was taken to support the bankruptcy, the matter had neither been referred by a committee or board, nor was there either a quorum or sufficient votes to support the resolution.
The resolution endorsing the mayor's Chapter 9 filing, as drafted by City Attorney Barbara Brazzel-Massaro, would grant blanket spending permission to the mayor for any expenses related to the filing.
The aldermen also were expected to vote on an opposing resolution that would affirm the legislative body's fiscal powers in the matter. Proponents of that measure say it would call on the mayor to seek the council's approval on all expenditures related to the Chapter 9 petition -- such as legal and consulting fees.
As the state and city have continued their duel over legal documents, the Bridgeport case has maintained national media attention. Rev. Jesse Jackson, the non-voting senator for the District of Columbia, led a march and rally here yesterday. In the second day of his two-day visit to the state, he also visited Hartford, where he met with Gov. Lowell P. Weicker Jr. and other state officials.
"A distress signal has been sent from Bridgeport, and heard around the country," Mr. Jackson said yesterday in Bridgeport. "This crisis, the distress in Bridgeport, does not just apply in Bridgeport. This is simply evidence of, an example of, a national economic crisis."
For Bridgeport, problems with creditors are especially poignant. The city prides itself on having rapidly become the state's booming base of industry.
It also is a city whose growth relied on the existence of America's nascent municipal bond market. A plaque in the lobby of City Hall here proclaims that, "Municipal bonds helped bring the Housatonic Railroad to Bridgeport."
In other developments, the Connecticut Conference of Municipalities said it had thrown its weight behind Bridgeport's bankruptcy bid. The conference yesterday filed a brief in federal Bankruptcy Court here, asserting that Bridgeport has not overstepped statutory boundaries in filing for protection from creditors.
The brief, however, did not expressly endorse Bridgeport's petition for protection, but sought to preserve the Chapter 9 rights of Connecticut's cities and towns in general.
"We feel that this case has precedent-setting ability," said Kevin T. Maloney, spokesman for the conference. Even though Bridgeport has the peculiar feature of being under the constant scrutiny and legal authority of a 12-member state board, the conference deems it should have the same right to bankruptcy as any other municipal body in Connecticut.