Atlantic City About to Run out of Money — and is Fighting a Hostile Takeover by State
State senators gave their first approval Thursday to granting Gov. Chris Christie’s administration sweeping powers over municipal finances in Atlantic City, where the local government is on track to run out of money next month.
Atlantic City’s plight is by now a familiar one: Competition in nearby states has crippled its gaming industry. Four casinos have closed. Its tax ratables are down by two-thirds. Property taxes are up more than half, and the city has a budget deficit it can’t close without more state assistance.
State officials say they want unprecedented powers over local decision-making as a condition of that help, with lawmakers saying a bankruptcy must be staved off to discourage other financially distressed cities from doing the same. A single bankruptcy would spook Wall Street and hurt the state’s municipal bond market, they said.
If we do nothing, bankruptcy looms in three or four or five weeks.
“A bankruptcy hurts many, many other communities in this state, and communities that are basically doing nothing wrong,” said Senate President Stephen Sweeney, D-Gloucester.
“If we do nothing, bankruptcy looms in three or four or five weeks. Well, that’s staggering. And that is unacceptable,” said Sen. Kevin O’Toole, R-Esssex. “As a legislator, as one of the 120 legislators here, we have to take some action.”
“The state is not the bogeyman,” said Bob McDevitt, president of UNITE HERE Local 54, the casino workers’ union. “We need help, and I think the city would be foolish to try and limp along the way that they have looking for a handout.”
The bill advanced by a vote of 9-1. Five Democratic senators supported it but three voted to abstain, with Sen. Linda Greenstein (D-Middlesex), citing concerns about the prospect of giving the state the power to void union contracts. Police and fire union officials testified against that provision.
Four Republicans voted yes, but Sen. Jennifer Beck (R-Monmouth), called the bill an overreach and noted that past state takeovers, mostly of urban school districts, haven’t yielded the desired results.
“I wish I could report that in each of those cases, we say some kind of dramatic improvement or some great change or some wonderful new moment in time, but we haven’t,” Beck said.
The takeover bill would allow the state to make local governing decisions for five years. It would be permitted to dissolve local agencies, veto the actions of the governing council, sell assets, terminate contracts, modify the terms of collectively bargained agreements, such as salaries and hours, abolish positions and lay off employees, offer early retirement incentives and enter shared services agreements.
Around 100 people from Atlantic City joined city officials for a trip to the Statehouse to oppose the bill, with some telling lawmakers that New Jersey had no issue diverting casino taxes to other causes for years and now should return the favor.
If President Barack Obama had did this to the state of New Jersey, there would be a civil war.
“The framework is not a partnership at all. This legislation is one-side surrender of our responsibilities as local leaders to the governor and his administration,” Atlantic City Mayor Don Guardian said.
City Council President Marty Small said the city needs help but that the takeover is unfair.
“Take the politics aside,” Small said. “If this was Anytown, New Jersey, where you live, you would not be standing for this. It would not be possible. You would be sitting here screaming and hollering like we are."
Steven Young of the South Jersey chapter of the National Action Network wound up arguing with the committee’s fill-in chairwoman, Sen. Teresa Ruiz, D-Essex, when she sought to cut off his testimony after six-and-a-half minutes. He was escorted away, then handcuffed by state troopers when he tried to re-enter the committee room after being asked to leave.
Young was charged with defiant trespass and disorderly conduct.
“If President Barack Obama had did this to the state of New Jersey, there would be a civil war,” Young had told the committee. “Well that’s how we feel. We are at war against this legislation that takes away our sovereignty and our right to vote.”
The takeover bill, and an accompanying one that would direct casino payments to the city and state to stabilize city finances, are scheduled for votes Monday by the full Senate.
There is no action currently planned in the Assembly, which like the Senate enters its budget-break recess Monday.
“My concerns remain unchanged – the state already has the authority to help Atlantic City avoid financial disaster and collective bargaining rights must not be trampled,” said Assembly Speaker Vincent Prieto (D-Hudson). “I still remain willing to negotiate and have asked all parties to sit down together in the same room, but no one has taken me up on my offer.”
Guardian told reporters that when the city runs out of money in April, it will stop paying some bills, unless it receives a short-term loan from the state.
Guardian said that some layoffs will be considered, but not for first responders, but that payments to the state for public workers benefits and to bondholders will be delayed. In May, he said, the city will receive $80 million when quarterly property tax payments are made.
Sorry Wall Street... You thinking we're in trouble now? Feel the pain with us.
“Are we going to lay off police when we run out of money? No. I need my police to keep the city safe, and I need my fire department to prevent and to put out fires. And I need public works for the obvious, picking up trash. So what are we going to do? We’re not going to pay some other bills. Who’s going to come first? Certainly the state of New Jersey.
“Anything we owe from the state, not going to be paid. Pension payment, guess what? Not going to be paid. How about health benefits to the state? Not going to be paid. How about interest on our debt? Sorry Wall Street, and things like that. You thinking we’re in trouble now? Feel the pain with us,” he said.