Atlantic City officials blast proposed state takeover

Reuters News
Posted: Jan 13, 2016 2:48 PM

By Daniel Kelley

ATLANTIC CITY, N.J. (Reuters) - Elected officials in Atlantic City, New Jersey's distressed seaside gambling hub, denounced a proposed state takeover of the city's operations on Wednesday, saying similar moves to seize control of school districts in Camden and Newark have failed.

"Everything the state of New Jersey operates turns to crap," said Atlantic County Freeholder Ernest Coursey, who represents the area. 

Coursey, city council members and Mayor Don Guardian met with reporters to condemn the Municipal Stabilization and Recovery Act proposed by New Jersey Senate Democrats.

Atlantic City's tax base lost about 70 percent of its value, dropping to a projected $6 billion this year from $20.5 billion in 2010, as casino properties were hit hard by increased competition in neighboring states.

The proposed bill would allow the state to run city government for 15 years, liquidate public assets and dissolve departments, according to a draft of the legislation expected to be introduced later on Wednesday.

New Jersey, which has a history of strong support for its distressed cities, already appointed a fiscal monitor and emergency manager to oversee Atlantic City's finances. The state currently must approve its budget and hiring decisions.

But Senate President Steve Sweeney's plan, announced on Tuesday, would grant sweeping control. Sweeney, a likely 2017 gubernatorial candidate, is a Democrat from South Jersey who said his close friendship with Guardian has not changed.

Sweeney said local leaders had not cut enough costs and state lawmakers were experiencing "fatigue" for their efforts in to help Atlantic City.

Even so, Guardian said during a separate State of the City address on Wednesday that the city trimmed $14 million from its 2015 budget and expects to cut $16 million more this year.

However, Sweeney said if his bill is not passed, he would support a bankruptcy filing. Under his plan, the city's elected officials would retain control over any decision to file for bankruptcy.

Guardian said bankruptcy was "not off the table," noting that $161 million of tax appeals owed to the Borgata Casino looms large. 

One conflict is whether to sell the Atlantic City drinking water utility, an independent authority not actually owned by the city. In July, when a leaked state memo suggested taking over and monetizing municipal assets, Guardian said it was "absolutely unacceptable."

"The value of the authority should not be looked at as a monetary asset, but for the service it provides," the utility's executive director, G. Bruce Ward, told Reuters on Wednesday.

(Reporting by Daniel Kelley in Atlantic City; Additional reporting by Hilary Russ in New York)