NJ lawmakers ask where state was while Atlantic City unraveled
The Jersey Shore gambling resort town has seen four casinos close in recent years, cutting its casino tax revenue in half.
Gov. Chris Christie’s designs on a takeover of Atlantic City endured a withering critique Monday in the Assembly Budget Committee, which in considering the Department of Community Affairs’ spending plan for 2017 dwelled extensively on perceived failings going back to 2010.
Atlantic City faces a budget deficit so wide that it could close nonessential offices and default on its bond payments by June. The problems stem from a collapse of the casino industry, and the ripples have opened a political schism in Trenton, where Christie and the Senate advocate an immediate takeover of local government but the Assembly has been unwilling to go along.
The state has had a fiscal monitor overseeing Atlantic City since 2010. It gave the city $13 million in transitional aid in both 2014 and 2015, a step that comes with it a "memorandum of understanding" in which the state and city negotiate the details of what changes the locality needs to put in place.
All of those gave the city significant leverage it doesn’t appear to have used, lawmakers contended.
“Now we’re going to reward the state again by having it involved even more so?” asked Assemblyman Gary Schaer, D-Passaic, who said the monitor approved budgets that are “fiscally impossible.”
“If during this last six years, if we didn’t think that Atlantic City was making the tough decisions, why did they get transitional aid? Isn’t that the law?” asked Assemblyman John McKeon, D-Essex.
Schaer called the transitional aid given to Atlantic City “almost a reward for fiscal irresponsibility.”
“If in fact it was in the end negotiated that a version equal to or closer to the Senate version in fact was enacted, meaning some accelerated, it doesn’t sound as though the department’s prepared from a budgetary standpoint to engage and be overly helpful,” said Assemblyman John Burzichelli, D-Gloucester.
Community Affairs Commissioner Charles Richman said the state’s powers of oversight now on the books are too limited to make the changes that are needed. He said state officials can block actions but can’t be proactive. For instance, it can prevent new hires but can’t put a layoff plan in place.
“We don’t believe that that authority extends to the level necessary fiscal reality to this municipality,” Richman said.
“The state needs to assume the direct responsibility for the decision-making. And we can debate would’ves, could’ves, should’ves, and I’ll take some of the blame if people wish. But the reality is we’ve reached a point where dramatic changes have to take place,” Richman said.
Lawmakers worried whether the roughly $107 million allocated in Christie’s budget for transitional aid to troubled municipalities will be enough, given that Atlantic City has requested $40 million. Richman said the city hasn’t proposed a budget so it’s not known how much aid ultimately will be provided.
It wasn’t just the Democrats giving Richman a hard time.
Assemblyman John DiMaio, R-Warren, seemed skeptical the Christie administration would make the needed changes to balance Atlantic City’s budget, and pushed back when Richman said it would.
“It seems like there hasn’t been real conviction to deal with this problem in five years or four years or three years. It’s only when the real crisis hits the fan that we talk about convictions. My fear is that if the bill gets passed, do we really have the intestinal fortitude to do what we need to do with adjustments in salaries, adjustments in staffings, to make the spending match the revenue? That’s really how you can build a budget,” DiMaio said.
“I believe the governor has made it perfectly clear that the administration will make those moves,” Richman said.
“I’m not sure about that,” DiMaio said.
“My experience is that when he says he’s going to do something, you can go to the bank on it,” Richman responded.
Christie, at an unrelated press conference later in the day, said DiMaio knows how to reach him if he has concerns about the administration’s intentions in a takeover.
Richman, who has worked at the Department of Community Affairs since 1986, said he’s never seen a municipality with the problems currently facing Atlantic City.
“The city faces extraordinary problems. I don’t recall in my career seeing a municipality in the condition, the financial stress that Atlantic City is in. They will at some time in the near future — I can’t tell you the date — but they will run out of cash,” Richman said.
“Atlantic City is bleeding cash. It will run out of money shortly,” Richman said.
Richman, not surprisingly, told lawmakers the go-slow alternative to a takeover proposed by Assembly Speaker Vincent Prieto, D-Hudson, isn’t sufficient.
“The time frames built in that bill don’t allow us to make some of the hard decisions that city so far has refused to make,” Richman saisd.
The state also loaned $40 million to Atlantic City. Richman said the state expects to be repaid.
The Department of Community Affairs plans to spend $1.38 billion in fiscal 2017, including $823 million in state budget funds.