Atlantic City will run out of money in early April and is preparing to shut down all non-essential government services on April 8.
Police, fire and sanitation services will continue, as well as revenue collecting services, though employees will not be paid during the planned three week closing. Those employees will be paid back pay when the city expects to reopen—after May 2 when the city expects to receive quarterly tax payments—but other city employees will be furloughed.
A shut down would not affect the city’s casinos, as they are regulated and policed by state agencies.
Atlantic City Mayor Donald Guardian first announced that the city would close for most of April unless the state gave to city a loan to continue operating. But the announcement just brought more rhetoric from New Jersey Governor Chris Christie that the state will not bail out the city, and the closure now seems likely.
Guardian had gone to Trenton seeking a short-term loan of $8.5 million for the city, but made the closure announcement after the state rejected the request, reported the Press of Atlantic City.
Guardian also pushed for the passage of a finical aid package for the city in the state legislature that would set a payment in lieu of taxes plan—or PILOT—for the city’s casinos, but also would direct some casino-related funds to the resort. While those bills couldn’t be in force before April 8, they could help the city from facing a similar shut down in a few months, Guardian said.
The city’s schools—which operate under their own budget—would not be affected. The city has been directing school taxes it collects to the school district as scheduled, Guardian said.
Police and fire union officials also told the Press that their members will report to work during the shutdown. Health benefits will stay in force for all employees, Guardian said.
Despite the dire circumstances for the city, state officials said no relief from the state is likely.
“I don’t expect the state to write them a check,” state Senate President Stephen Sweeney said in a radio interview.
Christie took and even harder line.
Christie called the idea of a short-term loan to the city nothing but a “Band-Aid” on a bigger problem that Atlantic City officials are “unwilling and incapable of fixing.” Christie said Atlantic City’s municipal budget is two to three times more than any other city in the state and that $25 million cut from the city budget this year by Guardian was a “drop in the bucket,” especially since the city is facing about $400 million in debt it can’t currently pay.
“I am no longer going to allow the taxpayers of New Jersey to be responsible,” Christie said at a news conference after the mayor’s announcement.
Christie also referred to a bill before the state Legislature to have the state takeover all of the city’s finances including selling city assets and ending union contracts. The bill is a companion to the PILOT bill.
“The mayor can decide to do one of two things. Either cooperate along with Speaker Prieto, or the inevitable will occur,” Christie said. “And the inevitable is that they will face bankruptcy. And if they do, then the bankruptcy court will control their fate, not the state of New Jersey. If that is what they prefer, it is their choice.”
Both bills have been approved by the state Senate, but they have stalled in the Assembly after Assembly Speaker Vincent Prieto said he would not bring the bill to the floor unless municipal union contracts were protected. That set off a war of words between Christies and Prieto with the governor vowing to veto both bills if they were amended in any way.
While there has been much hope for a compromise, not negotiations on the matter have been reported.
Guardian has labeled the takeover bill fascism and said the city may have to eventually choose bankruptcy if the PILOT bill does not pass.
Regardless, neither bill could go into effect in time to stop the proposed shutdown.
But the PILOT bill is in trouble. With the legislature considering a bill that would stop casino tax appeals in Atlantic City by setting a payment in lieu of taxes plan, but if new casinos open in New Jersey, those casinos could opt out of the plan.
The PILOT bill would set fixed payments in lieu of property taxes for 10 years for the casinos and bar them from filing tax appeals. Successful casino tax appeals have been a major factor in Atlantic City’s current financial troubles, which could ultimately lead to the resort declaring bankruptcy.
The state Senate passed the bill last month, but language added to the bill gives casinos the option to withdraw from the financial agreement and become subject to regular property taxation, reports the Press of Atlantic City.
The wording was added after the bill’s introduction by an amendment from the Senate Budget and Appropriations Committee.
Atlantic City Senator James Whelan said the language was added after some casinos made a request to the governor’s office. The request went through that office to Senate President Stephen Sweeney, who is the sponsor of the bill, Whelan told the Press.
The state has approved a referendum to go before voters in November to allow two casinos to be built at least 72 miles from Atlantic City. Each of the two casinos must be built in a separate county, under the question, but no sites for the casinos or information on how they will be taxed is included. The two most discussed sites for the casinos are at the Meadowlands Sports Complex and also in Jersey City.
Opponents of the new construction feel that the new casinos will cannibalize Atlantic City’s customers and further depress the resort’s market, just as it appears to be stabilizing after losing four casinos in 2014.
Whelan said the provision was included to be fair to Atlantic City casinos.
“The effort here has been to strike a fair number that is predictable and stable and fair, Whelan told the Press. “And fair also includes fair to the taxpayer, which in this case is the casino. And if you have casinos up north, it’s a whole new equation.”
The potential impact of new casino construction has also effected a long-running battle over the fate of Atlantic City Taj Mahal casino.
The casino has been acquired by billionaire Carl Icahn, who had promised to invest $100 million in the property. He now says, however, that he won’t make the investment if casinos are approved for North Jersey.
City casino employees again picketed the casino, which was allowed to suspend health benefits to employees during bankruptcy proceedings. That started a protracted fight between Unite HERE of Local 54—the city’s main casino workers union—and Icahn.
The union has picketed the Taj Mahal more than a dozen times in the dispute, but Icahn mentioned the new casino construction in a letter to employees ahead of this latest rally.
“Simply put, North Jersey gaming will probably be a death sentence for the Taj and the Atlantic City economy,” Icahn wrote “This is the issue that will make or break Atlantic City. This is the issue we should all be rallying against.”
New Jersey’s referendum also drew the attention of the New York Gaming Association. One of the major attractions of the new casino proposals is that they are adjacent to Manhattan and the rest of New York City. Analysts feel that they could be two of the most successful casinos in the country, at least until New York responds by allowing its own casino construction in Manhattan.
“New casinos in northern New Jersey would present a significant threat to New York’s gaming industry, risking hundreds of millions of dollars in critical education revenue and jeopardizing thousands of family-sustaining jobs,” the association said in a released statement. “New York must ensure that its successful casinos can continue to compete on a level playing field.”
The Gaming Association’s members include Finger Lakes Gaming & Racetrack, which is owned by Buffalo’s Delaware North Cos., Hamburg Gaming at Buffalo Raceway, which is managed by Delaware North, and Batavia Downs Gaming, which is owned by Western New York Off-Track Betting Corp., which in turn is owned by counties in Western New York as well as the cities of Buffalo and Rochester.
