State taking Atlantic City to court as money crisis deepens

AP News
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Posted: Apr 04, 2016 4:51 PM

TRENTON, N.J. (AP) — New Jersey Gov. Chris Christie took aim at two of his favorite targets Monday — public employee unions, and Atlantic City's municipal government — in insisting his is the only way to fix the finances of the nearly broke seaside gambling resort.

The Republican governor directed his education commissioner to sue the city to prevent it from making a payroll payment Friday because he said it owes its school district $34 million through July.

The lawsuit increases the pressure on Atlantic City Mayor Don Guardian, a Republican, and Democratic Assembly Speaker Vincent Prieto to support a financial takeover of the city by the state. Christie and Democratic Senate Speaker Steve Sweeney support the measure, but Prieto has refused to post it for a vote because he said it could allow the state to end collective bargaining agreements.

"What I'm looking to do now is manage a series of bad situations," Christie said at a statehouse news conference. "I think the situation is ratcheting up the pressure on all of us."

Atlantic City's city council will vote Wednesday on converting workers to a 28-day pay period, which would keep city government functioning after the city runs out of money on Friday. The state's lawsuit could put that plan into question.

Christie said Prieto cares more about public employee unions than he does about Atlantic City's school children because the speaker continues to refuse to allow a vote on two bills seen as crucial to relieving the city's fiscal crisis. One would do away with property taxes for casinos in favor of specified annual payments to the city, and the other would give the state vast control over the city's finances and major decision-making power.

The governor also said Atlantic City has been unwilling or incapable of cracking down on police and firefighter expenses.

"The speaker has put himself in line with public sector unions," Christie said. "This administration is putting itself in line with the people of Atlantic City. If they want to test me, they can test me."

Guardian said afterward that Atlantic City has made payments when two state-appointed monitors told it to, adding perhaps the governor "should ask the Attorney General to take legal action against himself."

The statehouse meeting came after Christie and Prieto have been trading sharply worded critiques in recent days. Christie called Prieto a "co-captain of the Titanic," and Prieto said Christie should do his job and compromise.

Christie met with Prieto for about an hour on Monday but said that they made no progress on a proposed takeover bill.

Prieto called on Sweeney to negotiate a new Atlantic City takeover bill that would be acceptable to Christie. Prieto said he hasn't been given the opportunity for input on the takeover bill, and said that "our core values of collective bargaining and fair labor practices should not be the first things on the chopping block."

"The Assembly has to be relevant," he said. "We have not had a discussion. We are being dictated to."

Sweeney's office did not immediately reply to a message seeking comment.

Prieto has also said that Christie already has the authority to help Atlantic City, but the governor disagrees with Prieto and says the takeover legislation is necessary.

Also Monday, Atlantic City's already lowly-rated debt was downgraded once again by Moody's. Moody's cited the "ongoing political stalemate" in the statehouse and a possible default within the next year.

Atlantic City's financial crisis was brought about by the contraction of its casino industry, mainly due to ever-growing competition from casinos in nearby states. The city's casino revenue has fallen from $5.2 billion in 2006 to $2.56 billion last year. In 2014, four of its 12 casinos went out of business.

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