Atlantic City mayoral challenger criticizes state oversight
New Jersey’s oversight role of Atlantic City finances is a central issue in the city’s mayoral election.
Mayor Marty Small, a Democrat, faces a challenge from Thomas Forkin in Tuesday's election. Forkin, the former chair of the Atlantic City Democratic Committee, is running as a Republican.
Forkin, an attorney, has centered his campaign largely on challenging the state’s intervention efforts, which he argues have been to the detriment of Atlantic City taxpayers and have handcuffed the city from collecting more revenues.
Atlantic City’s government has faced state control since November 2016 under the Municipal Stabilization and Recovery Act signed by previous Gov. Chris Christie following a near default of the city’s debt.
“The state is not our friend and they have played a large hand in the problems we have today," said Forkin in noting the state’s role in enabling casinos to make payments in lieu of taxes. “We want to send Trenton a message this election cycle that we aren’t going to go silently into the night and make the appropriate legal challenges.”
The MSRA designation — implemented because the city faced potential insolvency and default — is slated to last until at least November 2021, but Lt. Gov. Sheila Oliver has indicated that oversight of Atlantic City will likely need to be extended. Oliver is commissioner of New Jersey’s Department of Community Affairs, the department that oversees city finances under the MSRA.
Forkin said if elected he will sue the state in federal court to end the takeover, while Small would maintain the status quo. He noted that an aggressive legal fight against the state has the support of influential New Jersey Republicans including former Assemblyman Jack Ciattarelli, who is challenging Gov. Phil Murphy in next year’s gubernatorial election.
Marc Pfeiffer, assistant director of Rutgers University's Bloustein Local Government Research Center, said a legal challenge against the stake takeover would have very low odds of succeeding.
“I think the chances of a federal court engaging in what is a clear state prerogative are very small,” Pfeiffer said. “Cites are not represented in the U.S. Constitution, just states. There’s a long case history on courts staying suit of these issues.”
In addition to looking to end state intervention, Forkin also wants Atlantic City government to take an active role in changing the 2016 Casino Property Tax Stabilization Act that allowed the city’s gambling facilities to make PILOT payments over a 10-year period. He said the city has also been harmed by the creation of the Casino Reinvestment Development Authority’s Tourism District, which has reduced the taxes and fees casinos generate for the city.
“We have been hemorrhaging money for a decade and much of the blood is on the hands of the state,” said Forkin, a former assistant city solicitor under the late former Mayor Jim Whelan and a legal advisor for the Atlantic City Police Department. "The state is draining us from revenue.”
Forkin is currently a teacher at the Atlantic County Institute of Technology and director of the AC Surf School. He also was recently chairman of the Atlantic City Alcohol Beverage Control Board.
Small did not respond to requests for comment on the state takeover or his other fiscal goals if elected. The former city council president was sworn in as mayor in October 2019 following the resignation of Frank Gilliam, who pleaded guilty in federal court to embezzling more than $87,000 from a youth basketball club he co-founded.
The winner of the Small-Forkin race will serve the remaining one-year of Gilliam’s expired term and then need to run again next November for a full-four year term.
Murphy endorsed Small for mayor in June in his successful Democratic primary bid. Small was previously a vocal critic of the state takeover, but has worked in close partnership with the Murphy administration since assuming the mayoral post.
DCA spokeswoman Lisa Ryan said that continuing the MSRA would be beneficial for Atlantic City noting that the state’s involvement has led to stabilized budgets with its municipal taxes decreasing in 2020 after remaining flat the previous two years. She also noted that there is potential to make further strides from recommendation outlined in an Atlantic City Transition Report unveiled by the Murphy administration two years ago as a roadmap for the city’s revitalization.
“While a lot has been accomplished, there is much more work that needs to be done, especially as a result of the COVID-19 pandemic and economic recession,” Ryan said in a statement. “The State has the ability to help the city’s governmental leaders broaden their scope and cultivate relationships with people who run other important institutions in New Jersey in order to access resources that can assist the city. We think much can be gained by this continued collaboration.”
The city's bonds carry speculative-grade ratings, but the trajectory is upward.
Moody’s Investors Service upgraded Atlantic City general obligation bonds two notches to Ba3 from B2 with a stable outlook in January citing improved financial conditions achieved under state oversight. The Ba3 rating is six notches above Moody’s rating of the city debt from April 2016 to November 2018.
S&P Global Ratings rates Atlantic City debt on par with Moody’s at BB-minus with a positive outlook. It lifted the city’s bonds two notches in November 2019 to BB-minus from B.
Pfeiffer said whoever wins the mayoral election won’t have much power to change the state takeover or alter any casino legislation in Trenton with the pandemic hampering the city’s economy due to restrictions at casinos.
He noted that revenue struggles at Atlantic City casinos will result in lower PILOT monies and will force the city to collaborate closely with the state for making up the funding gap.
“It is going to be very hard to challenge the party controlling all the cards,” Pfeiffer said of the state’s leverage over Atlantic City. “There is no certainty and the only certainty is uncertainty which only requires more cooperation and coordination between the city and state, not less.”