Despite Atlantic City’s Opposition, Senate to Consider Takeover Plan
A hostile takeover of Atlantic City government is due to take its first formal step in the Senate Thursday.
The collapse of the gaming industry that has led to the closing of one-third of the seaside resort’s casinos has had a crippling effect on property values and city services. Despite cuts in local spending, more outside help is needed – but if it comes, it’ll be with major strings attached.
Gov. Chris Christie and Senate President Stephen Sweeney have agreed on legislation that would give state officials vast powers over municipal decision-making – such as the ability to break union contracts, sell city assets and lay off workers.
They announced the deal in late January with Atlantic City Mayor Don Guardian by Christie’s side and on board, but the mayor has since called the idea a “fascist dictatorship” since seeing the bill’s details, even though they mirror what Christie and Sweeney outlined when the three held a Statehouse news conference.
“To get to the ultimate goal of a government that the people can afford, we’d have to do some things that are very, very dramatic, and getting serious with the workforce in Atlantic City and explaining to them that, look, this is what we can afford,” said Sweeney, D-Gloucester.
Initially, Guardian strenuously opposed Sweeney’s proposal, which has been intermittently called a takeover, intervention or partnership, depending on the day and who was talking. That’s part of what made his endorsement of the concept Jan. 26 surprising.
It was also short-lived. Guardian and other city officials are back to fighting the idea. On Tuesday, according to the Press of Atlantic City, Guardian told the New Jersey State Police Benevolent Association convention: “I might lose my job as mayor. We will file bankruptcy, but I’m not giving in to the state.”
The PBA had been at the Statehouse en masse last week for a lobbying day, including members of the Atlantic City local who were there to oppose the takeover legislation.
If the state takes control of local government, among the moves it may make is to dissolve the city’s police department in favor of a county-based department that would patrol the city, similar to what is being done in Camden.
Christie hasn’t said that specifically, but he has said he won’t sign a bill that doesn’t include the power to break collective bargaining agreements.
“I’m not going to do it with one hand tied behind my back,” Christie said last week on WPG's "Ask the Governor" program. “I have to have the freedom to do what needs to be done down there to fix the problem – bloated salaries, bloated pensions, bloated agreements, be able to negotiate with creditors. I’ve got to be able to do all that. If I don’t have the tools to do that, then why bother? It would just be a failed enterprise.”
An emergency manager appointed by Christie last year, Kevin Lavin, endorsed the regionalization of first-responder services, as well as the takeover, in his final report to Christie, submitted in January.
Assembly Speaker Vincent Prieto (D-Hudson) has said the Atlantic City bill should not include the authority to dissolve union contracts. He also says Christie should not have vetoed "payment in lieu of taxes" legislation in January that would have provided funding to stave off Atlantic City’s potential bankruptcy; it did not include the takeover now being contemplated.
The Assembly is not scheduled to take up the Atlantic City bill before Monday, when most of its committees will go into recess until May while the budget committee begins its review of Christie’s $34.8 billion budget plan for fiscal 2017.
Atlantic City can pay its bills into April, but the situation beyond that is unclear.
Two Atlantic City-focused bills are up for votes in the Senate Budget & Appropriations Committee.
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.
The state could file for bankruptcy on the city’s behalf, but only with the permission of state lawmakers on the Joint Budget Oversight Committee.
Under a companion bill, casinos would make payments to the city in lieu of property taxes for 10 years. This year they would pay a combined $120 million, and the amount would increase by 2 percent a year from there though could be adjusted up or down if gaming revenues change significantly. The city would have to share around 13.5 percent with Atlantic County, plus remit money to the school district.
Casinos would have to make payments to the state, as well -- $110 million over nine years, frontloaded to include $60 million covering 2015 and 2016. The state would send that money to Atlantic City if it adopts an adequate fiscal rescue plan. Also, money collected by the Casino Reinvestment Development Authority for the Atlantic City Tourism District tax would be used to pay down municipal debt.
New Jersey voters aren’t sold on the takeover, according to results of a Rutgers-Eagleton Poll. Fifty-one percent of adults say Atlantic City should handle its financial challenges on its own, while 44 percent say the state should intervene and assume greater control of local government.
The state has had a fiscal monitor in Atlantic City since 2010.