Atlantic City, New Jersey, paid its schools, but state disputes details

Reuters News
Posted: Apr 15, 2016 1:42 PM

By Hilary Russ

(Reuters) - Atlantic City, New Jersey's cash-strapped gambling hub, says it made part of its April payment to its school district due on Friday, but the state says the city is a full month behind.

The disagreement may be one of semantics, but it highlights the bitter divide between state and local officials after a lawsuit by Governor Chris Christie's administration against the city that seeks to protect school payments.

The relationship between Christie and city officials has broken down. Christie says the local government failed to stem the bleeding and that the state should take control to break labor contracts.

Atlantic City Mayor Don Guardian called the takeover legislation a "fascist dictatorship." Christie called Guardian, who was initially supportive, a "liar."

Then came schools. In New Jersey, cities collect property taxes and then remit them to school districts. Atlantic City, likely to run out of cash soon, was supposed to pay $8.5 million by Friday as its latest monthly remittance.

The state Department of Education and local officials agree on one thing: that the city paid $4.25 million this week. But they disagree about what to call it.

The state claims that payment is only half the full amount due for March. The remainder of the March payment and the entire April payment are still owed, department spokesman David Saenz Jr. told Reuters.

John Devlin, president of the Atlantic City School Board, told Reuters the payment was for April, that March was already paid, and that the district expects to receive the rest of the April revenue soon.

What explains the discrepancy? Devlin said there is an "obvious lack of communication" between state officials and Atlantic City's fiscal monitor, appointed by the state.

"The city's working well with us. The mayor has been very transparent," Devlin said, adding that schools will continue operating.

Saenz offered a different explanation, saying the city and district agreed to late payments earlier this fiscal year after the city missed a payment. The city essentially reset its clock, but Saenz said the missing month must still be paid and called the difference "a splitting of the hairs."

Guardian's chief of staff did not reply to requests for clarification. The mayor said in a statement that the state is "fully aware" of the city's actions and that "we have always made and will continue to make payments to the school district as one of our top priorities."

(Reporting by Hilary Russ in New Brunswick, N.J; Editing by Dan Grebler and Tom Brown)