Atlantic City has apparently decided to take its fight with New Jersey Governor Chris Christie to the courts and sued the state for .5 million in budget aid it expected—and was advised to include in its current budget—that Christie vetoed twice.
The move is actually a countersuit and comes as the city was already in court facing a lawsuit by the state to force it to set aside $25 million in funds for the city’s school district before other spending. A judge, however, blocked the state’s move last week as the city made a scheduled payment to the school district.
Meanwhile, state legislators met and tried to negotiate a compromise to two competing bills to have the state takeover the city’s finances, but announced that no real progress was made. Senate president Stephen Sweeney then said he expects the city will have to file for bankruptcy.
Starting with the city’s lawsuit, the suit seeks about $33.5 million that was expected to be included in a series of bills dubbed the Atlantic City Rescue Plan. Those bills set a payment in lieu of taxes plan for city casinos—designed to stop casino tax appeals—and redirected casino-funded marketing monies to the resort.
However, Christie vetoed the bill and then vetoed a second re-worked version of the bills that included his own recommendations. City officials have said that state-appointed monitors had advised them to include those funds in their current budget.
The city also seeks the appointment of a special master who in effect would oversee the city’s own overseer, the state Division of Local Government Services, according to the Associated Press.
The city claims it was counting on the money and points out that if it had received the funds, it could settle its debt to the city’s school district.
“The real issue now is for Governor Christie and the Legislature to agree on a compromise to quickly end the fiscal crisis in Atlantic City,” Mayor Donald Guardian told the AP. “I have spoken with many legislators who want to find a compromise, and they are willing to find a way to save Atlantic City. I am confident that once we get past the politics, we will find a winning solution that everyone can agree upon.”
In the state’s school system suit, the city paid its schools another $4.2 million to bring itself up to date with scheduled payments. It still owes the schools $25.5 million by July 15.
The state sought to have the city’s spending frozen until that money was paid, but Superior Court Judge Julio Mendez ruled against the state saying that the city’s payments are now up to date.
“So far, to everybody’s credit, the payments have been made to the satisfaction of the school board,” the judge said. “Everybody’s pleased. In some ways, the state has succeeded.”
The state had wanted the city to set aside the first $25.5 million of an estimated $40 million to $50 million in taxes the city anticipates receiving in early May for the schools, according to the AP.
Mendez said he would monitor the city’s payments to the district and take action only if needed. The city’s next school payment is due May 15 and Mendez set a hearing for that day.
As for the takeover plan, while there was some negotiation, the legislature remains divided between two plans.
A plan in the state Senate would see the state takeover all of the city’s finances—including the right to terminate union contracts—for five years. The plan could be amended to give the city 130 days to make cuts and avoid the takeover.
A plan in the state Assembly would give the city two years to reach predetermined benchmarks for cuts before the state takes over. The plan was proposed by Assembly Leader Vincent Prieto, who wants to protect collective bargaining rights for city unions.
The competing plans have set off an acrimonious battle between Christie, Sweeney—who sponsored the Senate plan—and Prieto. Christie had said he would only sign the Senate plan, but appeared to soften his rhetoric and said he was willing to negotiate.
However, meetings between Sweeney and Prieto were said to be unproductive and Christie again pushed for the Senate version, noting that the Assembly version hasn’t even been voted on in that house.
Sweeney said no progress was made in his meeting with Prieto.
“I think we’re going to face bankruptcy,” Sweeney told NJ Advance Media. “I’m very concerned what’s going to happen to other communities because of this.”
For his part, Prieto said he was glad talks had at least begun.
“It wasn’t my idea to create a bill and ram it down anyone’s throat,” Prieto said. “It’s not about me putting something up. It’s about getting something accomplished.”
