A bill to give New Jersey increased power over Atlantic City finances advanced in the State Senate Thursday, but opposition in the Assembly may prevent the legislation from becoming reality.
"The Municipal Stabilization and Recovery Act" cleared the State Senate Budget and Appropriations Committee by a 9-1-3 vote and is slated to head to head to the full Senate on Monday.
Assembly Speaker Vincent Prieto, D-Secaucus, said he opposes the bill because of it providing the state an ability to break union contracts for up to a five-year period.
"The state already has the authority to help Atlantic City avoid financial disaster and collective bargaining rights must not be trampled," said Prieto. "I still remain willing to negotiate and have asked all parties to sit down together in the same room, but no one has taken me up on my offer."
The bill's main sponsor, State Senate President Stephen Sweeney, D-Gloucester, emphasized that the legislation is necessary to prevent bankruptcy since Atlantic City owes bondholders more than $500 million and is faced with over $150 million in outstanding debt for tax appeals. The bill would empower the state's Local Finance Board to renegotiate Atlantic City's outstanding debt and municipal contracts for up to five years and achieve cost savings through reorganized government operations along with consolidating agencies. The state would also have an ability to leverage city assets such as the Atlantic City Municipal Water Authority to gain needed revenue.
"Atlantic City's fiscal crisis is severe and immediate," said Senator Sweeney in a statement. "The state needs to take a more active role to help prevent a total financial collapse. The intervention will allow the state and the city to work together to accomplish what Atlantic City can't do on its own."
Atlantic City Mayor Donald Guardian attended Thursday's committee session and expressed strong opposition to the intervention bill. Joining Guardian in displaying opposition to the senators were members of the city council along with representatives from Atlantic City's police and fire departments.
"[The Municipal Stabilization and Recovery Act] gives the State the authority to unilaterally terminate collective bargaining agreements, to abolish any City departments and eliminate non-elected positions in the city and to sell off valuable City-owned assets without consent from the local government or input from City residents," Guardian testified. "This legislation is a one-sided surrender of our responsibilities as local leaders and deprives the residents of Atlantic City of even the most modest aspects of self-governance and local control."
Guardian urged senators to instead only approve a companion bill called "The Casino Property Tax Stabilization Act" that would allow the city's eight casinos to make payments in lieu of taxes over a 10-year period. The bill, which would exempt casinos from a traditional property tax in exchange for PILOT payments on a quarterly basis, was approved by the committee in a 13-0 vote. Guardian described this legislation as ""a critically important component to the City's plan to stabilize the municipal budget by establishing a predictable and consistent revenue source."
Moody's Investors Service issued a March 9 report stating that Atlantic City could default as soon as April if recovery bills are not approved by the state. Moody's noted that the city's estimated $102 million 2016 deficit could be "dramatically" reduced this year and eliminated by 2020 if the bills pass. Atlantic City is rated Caa1 by Moody's and B by Standard & Poor's.