New Jersey’s state Senate has approved a bill that would strip Atlantic City’s government of financial control of the struggling municipality, but the bill could face a significant roadblock in the state Assembly.
The bill allows director of the state Local Finance Board to restructure Atlantic City’s debt, cancel contracts—including union contracts—eliminate city departments and sell city assets for the next five years. Atlantic City is already under state supervision of its budget and has an emergency manager appointed by Governor Chris Christie. The bill essentially puts what’s left of the city’s control in the hands of the state.
A companion bill that was also approved revives a financial aid proposal for the city that sets a payment in lieu of taxes plan for the city’s casinos and also directs some casino funding to the resort.
Christie and state Senate President Stephen Sweeney have touted the plan as the best way to keep Atlantic City out of bankruptcy. The city is facing about $400 million in debt it can’t presently payback.
But state Assembly leader Vincent Prieto has objected to the provision in the bill that gives the state the right to cancel union contracts. He has promised that the bill will not be voted on the Assembly unless union contracts are protected.
Prieto has not scheduled a vote on the bill and called for further negotiations. Christie, however, said this week that if the Assembly fails to act on the bill as is, the city will be left to its own devices.
“If the Assembly speaker wants to play public-sector union politics, he can go ahead and play it,” Christie said during a news conference. “And Atlantic City will run out of money, and we’ll have to see what happens then.”
Prieto fired back at Christie, criticizing him for twice vetoing rescue plans for the city.
“The Assembly doesn’t take direction from Governor Christie,” he said in a statement. “And if the Assembly decides to move a bill and the governor vetoes it, then it’s entirely the governor’s fault, once again.”
Key to the city, however, is the companion bill that sets a payment in lieu of taxes plan for the city’s casinos—a move designed to stop costly casino tax appeals which have helped ravage the city’s budget—and directs casino funding to the resort.
Without that bill, analysts including Moody’s Investors Service say the city could run out of money by early April.
That threat of bankruptcy and the effects it would have on the state allowed both bills to pass easily in the Senate. The financial bill passed by a 34-to-3 vote.
“When Wall Street and other credit agencies realize New Jersey will not support its public institution, it could mean major financial trouble for many of our institutions,” state Senator Paul Sarlo, a co-sponsor of the takeover legislation, said before Monday’s vote. “I think the takeover is the only solution we have to get financial house in order in Atlantic City.”
State Senator Jim Whelan, a former Atlantic City mayor, also supported the plan despite saying he had concerns about the bill.
“I still live there,” Whelan told NJ.com. “I’m not happy about this. None of us are. It’s a difficult decision. But we’re sent here to make difficult decisions. And this is one we have to make for the betterment of Atlantic City.”
In a related matter, Atlantic City’s City Council has voted to put the city’s 143-acre Bader Field site—a former municipal airport famous for being the first facility to be called an “airport”—up for auction in June. A minimum bid of $150 million has been set with those funds allocated for paying down the city’s debt.
It’s a bargain basement price for the tract as the city—which has been trying to sell it since the airport closed a decade ago—once hoped to get better than $1 billion for the property.
Pennsylvania-based casino company Penn National offered $800 million for the tract in 2008, but the city refused the bid hoping to get as much as $1.5 billion.
The council also delayed voting on a bill to absorb the city’s independent Municipal Utilities Authority into a city department. The MUA is seen as another valuable asset—worth as much a $100 million—that could be sold, but city officials want to keep the utility under city control to protect residents and keep water rates in the city low.
