Atlantic City government would get an extension of 130 days to create a cost cutting reform plan that could keep the state of New Jersey from taking over its finances for five years, under a compromise offered by state Senate President Stephen Sweeney.
The compromise would be with a state Assembly plan—championed by Assembly Speaker Vincent Prieto—that would give the city two years to meet certain fiscal benchmarks or the state would begin systematically taking over the city’s finances.
In the meantime, the city made a payroll payment to its employees, but will not make another until May as it ostensibly has no cash until quarterly tax payments come in next month.
In the end, it was just another week of political wrangling and little action as the city’s fiscal crisis deepens and it faces shutting down in a few weeks anyway.
Sweeney’s new proposal would be an amendment to a Senate=approved bill that would have the state takeover virtually all of the city’s finances including the right break union contracts and sell city assets. It would give the city’s government 130 days to try and fix its money problems before the state bill takes effect. The city would have to come up with a “legally binding” plan to make budget cuts.
If local leaders accept the proposed amendment, Sweeney and other lawmakers would petition Governor Chris Christie to provide a bridge loan from the state to the city to keep operating.
“This plan gives Atlantic City the opportunity to use all the tools at their disposal to finally reduce spending and reform government operations before the state asserts control over its municipal finances,” Sweeney said in a press statement. “For, years the Atlantic City government has made bold assertions regarding its ability to solve the problem. Despite those assertions, no solutions have ever been implemented in a material way. Our proposal gives the city one last chance.”
The proposal comes with the support of the state’s Assembly majority Leader.
“As I have said repeatedly, bankruptcy and financial ruin cannot be options for Atlantic City,” Assembly Majority Leader Lou Greenwald (D-Camden) said in a statement. “Under this plan, the city will be able to maintain local control and will be given the summer to implement a legally binding, realistic and responsible financial recovery plan.”
The Assembly’s takeover bill for the city—proposed by Prieto, also a Democrat—gives the city a longer window to make cuts and sets up a five-member panel—which could include the city’s Mayor and Council president—to meet assigned benchmarks.
Prieto has opposed the Senate plan since it allows the state to break union contracts. Prieto said he opposes exempting the state from fair labor laws and wants to protect collective bargaining rights.
That bill has been approved by one Assembly committee and faces a hearing before another, but since it contrasts sharply with the Senate bill, neither is likely to make it to Christie’s desk for signing.
Further, Christie has said he will not sign any version of the takeover other than the Senate bill and has been in a sharp war of words with Prieto and Atlantic City Mayor Donald Guardian.
Prieto did not indicate that he supports the new proposal.
“I’ve always made clear that I would take a look at any proposal, and I’m pleased to see a step toward compromise, but Atlantic City must be treated fairly,” Prieto said in his own statement. “This proposal seemingly doesn’t resolve the concerns about eviscerating collective bargaining, fair labor practices and the civil liberties of the people of Atlantic City. Those core concerns must be addressed for any proposal to be taken seriously.”
Atlantic City Mayor Donald Guardian also indicated he prefers the Assembly plan.
“We have enormous problems with legacy costs and debt service from previous tax appeals and other debts that must be addressed over the long-term,” Guardian told the Press of Atlantic City. “I am completely open to compromise and working together to find a solution, but it must be within a reasonable and practical framework.”
Under the amendment—announced by Sweeney, Greenwald, and state Senator Paul Sarlo—Atlantic City would have to reduce its spending to $3,500 per resident in the 130-day window. Christie and Sweeney have noted that the 40,000-resident city currently spends $6,700 per resident — higher than larger cities like Newark and Jersey City.
With 39,000 residents, the city’s budget would have to be cut by about $136.5 million from about $262 million, according to the Press of Atlantic City. The decreased spending would have to be in place on the first day of the month following the plan’s approval, according Sweeney’s office.
If the city fails to develop a plan approved by the state, the provisions of the takeover legislation would take effect 10 days later.
Meanwhile, committee also amended the Assembly bill. The amendments ensure that the city’s school district will receive 36.21 percent of the casinos payment in lieu of property taxes and requires that the proposed oversight committee issue interim reports on the city’s finances.
Other Developments
An Atlantic County Superior Court Judge rejected the Christie administration’s request to block the city from paying its workers until tax payments are made to the city school district.
The city paid the school district $8.5 million on April 15 and owes a total of about $25 million from now till June 30.
The state’s education commissioner David Hespe had filed a lawsuit to force the city to pay the $34 million, claiming the tax revenues collected in May won’t be enough to cover all the school payments. The suit said the district won’t be able to meet obligations if it doesn’t receive the money owed, according to the Press.
A hearing on the suit is scheduled for April 19.
Hespe later warned that without the payments, the state may have to close the city’s schools.
Guardian, however, told the Press that the city is working with the district and is ready to make at least part of its April payment.
The city also saw hundreds of union workers march in opposition to the Senate takeover plan buoyed by members of the New Jersey State AFL-CIO, which came out against the plan.
“This is not a state issue. Around this country, labor people are watching what happens here in Atlantic City,” Charles Wowkanech, president of the New Jersey state AFL-CIO said at the rally, which also featured other union leaders from the city and across the state, according to the Press of Atlantic City.
Finally, local business groups in the Atlantic City area announced they are forming a coalition to oppose a referendum to allow two new casinos to be built in the state outside of Atlantic City.
If approved, two casinos could be built in the northern part of the state. Though the referendum does not specify where the casinos could be built, Jersey City and the New Jersey Meadowlands—both close to Manhattan—are considered the leading contenders.
Opponents of the plan feel allowing in-state competition would further hurt the Atlantic City casino market.
The No North Jersey Casinos Coalition was formed to persuade voters to vote against the referendum. According to the Press, the Chamber of Commerce of Southern New Jersey is organizing the seven counties it covers to oppose the referendum.
“We’re comprised of a bunch of like-minded public officials, business organizations, individual companies, organized labor and regular citizens who believe gaming belongs in Atlantic City period,” said chamber President Debra DiLorenzo.
