Atlantic City again got no financial relief from the state of New Jersey as a planned vote on one of two competing plans to aid the city was cancelled late last week amid a bitter political dispute. State Senate President Steve Sweeney said the city could be “days away” from bankruptcy.
In fact, lawmakers couldn’t even agree on whether they were planning a meeting to seek a compromise.
The plan scheduled for a vote was before the state Assembly and proposed by Assembly Leader Vincent Prieto. It would set fiscal benchmarks for the city to meet as it grapples with a $100 million budget deficit and more than $500 million in debt it can’t pay back. If the city failed to meet the benchmarks, the state would begin taking over the city’s finances.
The plan is in direct opposition to one passed in the state Senate that would have the state takeover the city’s finances after a 130 day period.
Both plans would set a payment in lieu of taxes plan for city casinos—designed to stabilize their taxes and stop tax appeals—and redirect other casino related funds to the resort’s budget.
However, the Senate bill would allow the state to tear up the city’s union contracts. Prieto has objected that and offered his bill, which protects collective bargaining rights.
That’s the crux of a disagreement that has dominated headlines for weeks and left the city struggling to pay even its most basic bills as it tries to keep from declaring bankruptcy.
Prieto called off a vote on his bill after lawmakers seemed to be trying to count votes and determine if the bill would pass, according to the Associated Press.
Then, Assemblyman Louis Greenwald said Prieto and Sweeney—sponsor of the Senate plan—would meet to try and work out a compromise. Sweeney, however, quickly shot that down saying there was no planned meeting.
Meanwhile, Governor Chris Christie continued to say that Prieto’s bill has no chance to get his signature anyway even if it could pass the Senate. Christie also reportedly met with Republican lawmakers before the scheduled vote, but it is unclear if he urged them to vote against it.
After the cancelled vote, he said he expected the city to run out of money in 10 days.
Christie has blamed Prieto for the impasse, saying he is doing the bidding of Jersey City Mayor Steven Fulop, who is expected to challenge Sweeney for the Democratic nomination for Governor in 2017. Christie says Fulop is courting favor with unions and trying to make Sweeney look bad.
Fulop has denied any involvement and Prieto faults Christie, who twice vetoed rescue plans for the city that included the PILOT plan and casino revenues going to the city. Fulop’s battle now includes southern New Jersey power broker George Norcross, who is seen as strongly supporting Sweeney’s plan.
Fulop has publicly accused Norcross of being behind the push for the state takeover of the city for his own ambitions. Norcross denied this, but has connections to the New Jersey American Water Co, which could benefit from buying Atlantic City’s water utility if the state forced the city to sell it.
The battle even led to reports that there is a move to unseat Prieto from his Assembly leadership underfoot in the backrooms of the Statehouse.
As for the bills, Sweeney had amended his bill to give the city 130 days to make budget cuts before the state takes action, but city officials say they can’t solve their budget problems that quickly. Prieto’s bill would give the city about two years to try and meet the benchmarks.
Atlantic City Mayor Donald Guardian opposes the Senate plan saying it strips the city of all self-governance and likened it to fascism.
The city’s casinos, meanwhile, have called on legislators to act immediately on the rescue bills.
Saying they are “on the edge of the abyss,” the Casino Association of New Jersey called for immediate votes on the plans.
“We are all now on the edge of the abyss and this impasse must end,” the association wrote in a statement.
The association said either of the two competing bills would help the city as the casinos would benefit from the PILOT program because it provides certainty over unpredictable annual tax bills that can vary widely from year to year.
Earlier, national and state leaders of the AFL-CIO also wrote to New Jersey Legislative leaders to support Prieto’s bill, which they say provides critical protection for public sector workers, according to the Associated Press.
Richard Trumka, the union’s national president, and Charles Wowkanech, its New Jersey president, wrote to Sweeney and Prieto backing the Assembly package. They said the Senate bill backed by Christie would strip union workers of the right to organize and bargain for contracts, and deprive Atlantic City residents of their right to govern themselves.
Also, Jeff Albrecht, chairman of Meet AC which books the city’s convention business wrote a letter to legislators that the uncertainty over the city’s finances was having a drastic impact on customers’ seeking to book conventions in the resort.
The group says meeting planners are being scared away from the booking in the city and the board has reduced its estimate for hotel room nights this year for convention goers by 40 percent.
“Economically speaking, we are losing tens of millions of dollars over the next one to five years,” Albrecht wrote. “Even our New Jersey state groups are nervous about returning to Atlantic City. And our existing customers are asking for ‘out’ clauses in their contracts.”
In other developments, Atlantic City avoided going into default by making a $1.8 million debt service payment early last week. The payment covered bonds sold in 2012 to cover judgements against the city in casino tax appeals.
Guardian, speaking at a press conference, said the “careful decision” to make the payment came out of concern on how a default would after came affect the city, county and other state municipalities, Guardian said.
However, Guardian said there had been consideration of missing the payment to keep the city operating “for a few more days in June.”
The city also has to make a $6.5 million payroll payment and an $8.5 million school district payment is due May 15. Guardian said the city has about $6 million in cash, but is still receiving second-quarter property taxes.
“We looked at all of the costs. I wanted to make sure I didn’t put the bonds before payroll, before schools, before anyone else,” Guardian said. “After doing that careful review we made that decision to pay the bonds.”
The last New Jersey municipality to default on debt was Fort Lee in 1938. If Atlantic City defaults, Sweeney said it would affect the credit rating of many other New Jersey cities including Paterson, Newark and Trenton.
Also, the new Jersey Casino Reinvestment Development Authority agreed to buy out a $1.1 million debt on the city’s Steel Pier amusement park. The casino-funded authority has been trying to help the privately owned pier as it as seen as one of the city’s largest non-casino attractions.
The resolution allows the authority to settle the debt, which had led to moves by creditors to repossesses rides at the pier.
