Hoping for State Takeover of Atlantic City, Christie Wagers Casinos

by | April 1, 2016 AT 12:08 PM

By Andrew Seidman and Maddie Hanna

Gov. Christie on Thursday said he would personally campaign against a proposed constitutional amendment to expand casino gambling to North Jersey if the Assembly does not pass legislation authorizing a state takeover of Atlantic City's finances.

The Senate has already passed the takeover bill, but Assembly Speaker Vincent Prieto has refused to hold a vote, saying it would trample unions' collective bargaining rights.

Christie's threat -- and argument that voters would not approve the amendment if Atlantic City's finances continue to crater -- opened a new phase in a weeks-long battle with Prieto (D., Hudson) over how to bring stability to the troubled resort town.

"Atlantic City is heading for disaster, and North Jersey gaming is heading for defeat if we don't get our act together," Christie said at a Statehouse news conference Thursday.

Flanked by several charts, Christie began his remarks by telling reporters, "Let's start off with something I've pointed out many times." He moved toward one of the graphics, titled "Atlantic City's Bloated Government Spends 2-3 Times More Than Other Major New Jersey Cities," with bars contrasting Atlantic City to municipalities such as Harrison, Asbury Park, Newark, and Camden.

"None of these towns would be considered paragons of, like, fiscal conservatism," Christie said.

The governor suggested Prieto's refusal to cooperate would endanger cities throughout the state.

"What he's doing is placing the full faith and credit of not just Atlantic City but a number of other municipalities in this state at risk: Newark, Union City, Paterson, Trenton, Camden will all be at risk for significant downgrade if this situation is allowed to continue going forward," Christie said.

Prieto argues the governor already has the authority to rescue Atlantic City without the takeover legislation, which would let the state break contracts, dissolve agencies, restructure debt, and fire employees, among other provisions.

"Gov. Christie has overseen Atlantic City since 2010, and he even admitted today that the city's situation has since worsened," the speaker said in a statement Thursday.

"The governor also has the power to compel financial actions by the city through transitional aid agreements," he said. "Despite his many excuses, Gov. Christie owns the failings of Atlantic City since 2010. He needs to accept responsibility and stop blaming others."

Christie pushed back on that argument, saying, "If I had the ability to do this, why would I fight over it? I'd just go and do it, and let them sue me afterwards."

Mayor Don Guardian says the city will run out of money to pay its employees on April 8. At that point, the mayor has said the city would stop providing nonessential services.

City Hall would remain closed until early May, when the city expects to collect second-quarter taxes.

However, municipal unions are currently voting on a plan that would avert a shutdown by allowing the city to delay paychecks to workers.

The city owes $150 million in back taxes to the Borgata Hotel Casino & Spa and nearly $250 million in debt to bondholders.

Christie argued that it would be unfair to renegotiate debts with those creditors but spare public employees' labor agreements. A spokesman for the mayor didn't respond to a request for comment.

The governor again accused Prieto of doing the bidding of Jersey City Mayor Steve Fulop by making Senate President Stephen Sweeney (D., Gloucester) look like an enemy of public-sector unions.

Fulop and Sweeney are considered likely rivals for the 2017 Democratic gubernatorial nomination. Fulop and Prieto have both dismissed Christie's theory. "There is zero substance to his accusations, and this amounts to nothing more than a temper tantrum," Fulop wrote on Twitter.

Christie, who rose to fame in his first term by battling with unions, ticked off data that he said crystallized Atlantic City's irresponsible spending: $320,000 owed this year to both the retiring deputy fire chief and deputy police chief and $6.6 million paid out to retiring public employees in unused sick and vacation days.

Officer Keith Bennett, state delegate of the Atlantic City Police Benevolent Association Local 24, said, "That is why over the past four years, we, in negotiations with the city and Chris Christie's state-appointed monitor, have addressed those issues so they won't have those problems moving forward."

Bennett added, "Every day I'm hearing about police officers being shot, being killed, ambushed. Firefighters rescuing people in a fire. Are we overcompensated? I don't think so. I think [Christie] lives in a glass house. He shouldn't be throwing stones."

The city has similarly argued that it has worked with the state monitor to cut costs.

Guardian has expressed interest in filing for bankruptcy, but such a move would require state approval. Christie on Thursday reiterated that he would not permit Atlantic City to go bankrupt.

"An approval of bankruptcy by this office would have the potential of an awful downstream effect for other municipalities in this state," he said, decrying the "obstinance and the ignorance of the mayor of Atlantic City and the speaker of the Assembly."

Wall Street credit agencies have warned that Atlantic City could soon default on its debt payments. The takeover legislation, coupled with a bill that would establish a payment-in-lieu-of-taxes (PILOT) system for the city's eight casinos, could stave off a default.

Under the PILOT bill, which also passed the Senate, the casinos would pay the city a collective sum of $120 million annually for a decade. The legislation is intended to prevent the casinos from pursuing tax appeals, which have created a drag on the city's budget.

It would also reallocate money earmarked for marketing to the city to help it pay its debt service. The city's 2015 budget, which the state approved, assumed that legislation would pass. But Christie, who has previously vetoed the bill, says he won't sign the PILOT legislation unless the takeover bill also reaches his desk.

The idea that the PILOT bill alone would fix Atlantic City's finances is a "fairy tale," Christie said.

Asked about criticism that a state takeover would disenfranchise Atlantic City residents by sidelining the local government, Christie said, "Their elected representatives left them a long time ago."

Responding to Guardian's characterization of the takeover as "fascist," Christie said, "To use the term 'fascist,' you know, that has a very specific historical context. And it's offensive. It's offensive to the people who were victims of World War II fascism . . . To use that language is irresponsible," Christie said.

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