Atlantic City Mayor: ‘It’s up to us now’

According to common wisdom, be careful what you wish for, you might get it. Throughout the ongoing crisis, Atlantic City’s government has been asking for the chance to get its budget in order without a full-blown state takeover. Now it gets the rest of year to try to deliver.

A newly drafted package of state rescue legislation advanced in Trenton yesterday, marking the first real progress on the Atlantic City crisis in weeks. The legislative stalemate, brought on by disagreements over city employees’ collective bargaining rights, had threatened to send the cash-strapped resort into bankruptcy.

But now, with two pieces of state-rescue legislation scheduled for final passage on Thursday, the city could soon have access to new revenue from loans, state aid, and redirected tax revenue to help ease its budget problems, at least in the short term.

What remains to be seen is whether Gov. Chris Christie will approve the rescue bills. The governor’s office did not comment on the issue yesterday, though Democratic legislative leaders seemed confident Christie will ultimately be on board.

Even if the new rescue package is signed into law, the city and its public-worker unions still face a formidable budget-slashing task in the weeks and months ahead. As much as $30 million in cuts may still be necessary to keep a state takeover from going into effect, and big problems remain in future years as well.

A key to the deal reached yesterday on Atlantic City is that the local government will be given 150 days to come up with a balanced budget for 2017 and also to craft a five-year plan to get its overall finances in order. If city officials can’t come up with both plans by the deadline, a state takeover of the resort would likely ensue.

But earlier this year, Christie and Senate President Stephen Sweeney (D-Gloucester) had both been seeking an immediate takeover, arguing city officials weren’t up to the task of fixing the city’s fiscal problems. They wanted to give the Christie administration the power to renegotiate debt and rip up current collective-bargaining agreements, which became a key sticking point for Assembly Speaker Vince Prieto (D-Hudson).

The collective-bargaining issue could also be a dress rehearsal for the 2017 Democratic gubernatorial primary. Sweeney and Steven Fulop, the mayor of Jersey City and a Prieto ally, are expected to be candidates.

Now, the new version of the takeover legislation gives the city government and its unions until the end of the year to negotiate ways to help the city solve its budget problems before facing the threat of ending current collective-bargaining agreements.

Prieto touted that change as an accomplishment yesterday while going over the rescue legislation during an Assembly Judiciary Committee hearing.

“We have given them to the best of (our) ability a fighting chance,” Prieto said. “I think the workers there will pitch in.”

But Prieto in his own previous version of the Atlantic City rescue legislation had sought to give the city and its unions a window of two full years to meet a series of fiscal benchmarks before a state takeover could occur. Prieto suffered the embarrassment earlier this month of scheduling a vote in his own chamber for his version of the rescue legislation, only to see the session canceled when it became clear he didn’t have enough votes to advance it.

The new rescue legislation also gives the Christie administration the power to accept or reject both the city’s budget plan and the long-term fiscal framework, though the local government would have the right to appeal to the Superior Court.

And for the city, the rescue package includes a bill providing at least $120 million in annual revenue from payments-in-lieu-of-taxes from the resort’s remaining eight casinos. It also provides roughly $30 million in redirected casino revenue. The city would also get another $26 million in state aid, and access to a $30 million bridge loan.

Atlantic City Mayor Don Guardian, who was in Trenton yesterday to watch the latest votes, said he believes the new version of the rescue package should provide the city with enough tools to overcome its budget problems.

“It’s up to us now to make sure that we keep our sovereignty,” said Guardian, who previously opposed an immediate state takeover.

He said an early retirement initiative for city workers authorized in the rescue package could generate as much as $7 million in savings. The local government should also now be able to refinance its significant debt after seeing its bond rating fall recently well into “junk” status.

“I don’t believe that we need a state takeover, Guardian said.

Atlantic City’s fiscal problems stem largely from the past recession and increasing competition from new casinos that have opened in neighboring states. In all, four of the resort’s 12 casinos have closed in recent years, costing the city thousands of jobs. The remaining casinos, meanwhile, have successfully challenged their tax assessments, helping to reduce a ratable base that once totaled more than $20 billion to just over $7 billion.

A report released earlier this year by an emergency manager appointed by Christie predicted the city faces a budget deficit that could be as large as $300 million over the next five years. The emergency manager’s recommendations included privatizing or regionalizing the city’s municipal utilities authority and letting the county government take over the city’s health and tax assessment departments.

At the beginning of the month, Atlantic City’s government made a $1.8 million debt payment after there was some concern that the city would not have the revenue available to cover it. But Guardian conceded at the time that the city was on borrowed time and a deal on a state rescue would be crucial.

Those stark fiscal problems were at the heart of Sweeney’s efforts earlier this year to seek a full and immediate state takeover. The Senate passed its own version of the takeover legislation earlier this year.

Christie also supported an immediate takeover, and he called on lawmakers to send him the Senate bill unchanged after he dropped out of the contest for the GOP’s presidential nomination earlier this year.

Asked to comment in the State House on the new developments yesterday, Sweeney downplayed his own seeming victory in the backroom negotiations. The 150-day delay before a full state takeover could occur was much closer to a compromise he offered in April than the two years sought by Prieto.

“We need to move forward and we need to get Atlantic City in shape,” Sweeney said.

Christie had no public schedule yesterday and his office did not respond to a request for comment. Though Christie has said in the past that he didn’t want to see any changes to the bill granting an immediate state takeover, more recently he’s said he would be willing consider any compromise that the legislative leaders could reach.

Prieto said yesterday that the governor’s staff had been involved in the negotiations that led to the drafting of the new rescue legislation.

“We’re confident,” Prieto said when asked if he thought Christie would accept the new legislation.

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