After Christie vetoes aid, Atlantic City eyes bankruptcy

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Posted: Jan 20, 2016 2:18 PM
After Christie vetoes aid, Atlantic City eyes bankruptcy

TRENTON, N.J. (AP) — A day after New Jersey Gov. Chris Christie vetoed an aid package that blew a $33.5 million hole in their budget, officials of cash-strapped Atlantic City said they are considering asking the state for permission to file for bankruptcy.

Mayor Don Guardian, a Republican, and City Council President Marty Small, a Democrat, met Wednesday with the Democratic Assembly Speaker Vincent Prieto, asking him to oppose a proposed state takeover of the city. After emerging from the meeting, Guardian and Small said the City Council will hold an emergency meeting next week to consider a bankruptcy filing, which must be sanctioned by the state.

Christie, a Republican presidential candidate, vetoed a financial aid package for Atlantic City on Tuesday.

"Atlantic City government has been given over five years and two city administrations to deal with its structural budget issues and excessive spending," said Christie spokesman Kevin Roberts. "It has not. The governor is not going to ask the taxpayers to continue to be enablers in this waste and abuse."

It was the latest financial setback to hit the seaside gambling resort. An emergency manager appointed by Christie has said the city could run out of cash by early April. The city also owes $160 million in tax appeals to just one of its eight casinos, the Borgata. Other casino tax appeals are likely, as well.

Atlantic City's casino revenue has fallen from $5.2 billion in 2006 to $2.56 billion last year, and thousands of casino and related jobs have been lost. Four of the city's 12 casinos shut down in 2014.

The aid package included a measure that would have let the city's casinos make payments in lieu of taxes for 15 years, and bills to redirect casino investment taxes and marketing money to help pay down the city's debt. Christie vetoed the plan, even though it included changes he demanded from the state Legislature when he vetoed an earlier version of it in November.

"We feel it's extortion," Small said. "If this was on the other side, we'd be indicted. It's no secret we need money. Yesterday spoke volumes; it's monumental hypocrisy."

Legislation proposed by state Senate President Steve Sweeney, a likely candidate for the Democratic nomination for governor next year, would give the state vast power over Atlantic City, including the right to make most major decisions and sell off city assets and land. He has said lawmakers are tired of the resort's repeated requests for money, adding "there is Atlantic City fatigue" in the Legislature.

"Now, the Mayor finally recognizes the severity of city's problems, but his plan to declare bankruptcy is the worst possible outcome for Atlantic City and for the state of New Jersey," Sweeney said. "Putting the city into bankruptcy would have disastrous results for the city and could jeopardize the financial standing of other cities in New Jersey, resulting in credit downgrades and higher costs."

Yet just last week, Sweeney said he would support a bankruptcy filing for Atlantic City if the legislature did not quickly approve his takeover bill.

Guardian said he has "a knife in my back" from the state.

"We're shocked that the governor, who presented us with his bill, reneged on the funding," Guardian said.

The mayor said the city would emerge from bankruptcy with far less debt, paying "pennies on the dollar."

Prieto said his preference is to avoid a bankruptcy filing for Atlantic City. He said he has not yet taken a position on the proposed takeover of the resort's finances and decision-making powers, but added, "I'm open to it."

Prieto said he may propose amendments to the bill to make its terms less onerous for Atlantic City, or else he could introduce a bill of his own that would compete with Sweeney's measure in the Senate. That would duplicate a messy intra-party fight the two men had last month over a plan for a referendum on expanding casinos beyond Atlantic City, in which Sweeney's measure prevailed. It is awaiting votes in the Legislature.

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