Still No Deal On Atlantic City's Troubled Finances
ATLANTIC CITY, N.J. (AP) — Nearly a month after Governor Chris Christie vetoed most of a financial aid package for Atlantic City, there is still no agreement on how to stabilize the struggling seaside gambling resort, which continues to suffer from the shrinking of its casino market.
On Nov. 9, Christie vetoed most of a package of bills aimed at helping Atlantic City and its casino industry, and proposed that the state hold millions in aid hostage until after the city passes a fiscal recovery plan.
The key bill would have let the eight casinos make payments in lieu of taxes for 15 years, allowing them to know exactly how much they owe instead of facing huge potential increases each year. Instead, Christie would have $30 million in aid go to the state in each of tax years 2015 and 2016 that would only be released after Atlantic City approves a plan to fix its financial situation.
Despite a joint promise by Christie, a Republican presidential candidate, and state Senate President Steve Sweeney to sit down immediately to work out a way forward, a deal has yet to be reached. Atlantic City Mayor Don Guardian said he expects the state Legislature by early January to enact the changes Christie called for in his conditional veto.
"He (Christie) wants to make sure once we see tens of millions of dollars, we don't do anything foolish, like stop cutting our budget," said Guardian, who like Christie is a Republican.
A state-appointed emergency manager is due to issue a second report soon with recommendations for further austerity measures for Atlantic City.
Guardian said the city has already cut $25 million from its budget this year and got a grant to pay $21.5 million toward the cost of firefighter salaries the city otherwise would have had to pay.
Sweeney said he met once with Christie about the legislation, but no agreement was reached. Christie's office did not respond to a request for comment. Sweeney said both men agree Atlantic City simply spends too much for its size.
"You have a city, I think their budget's $262 million for 40,000 people," Sweeney said. "Compare that to other communities with 40,000 people. I talked to a mayor in Middlesex that had 60,000 people and his budget was $53 million. Atlantic City has significant work to do governmentally because it just costs too much. It's just way too much money right now."
The demise of the payment in lieu of taxes (PILOT) bill took away a potential solution for Atlantic City's chronically troubled finances. Casino taxes account for half the city's budget. With four of its 12 casinos having closed in 2014, Atlantic City has fewer casinos to shoulder the property tax burden, and it raised taxes by 32 percent in 2014.
And for years, the casinos have successfully appealed their property tax assessments, having little trouble convincing a tax board that they are worth less in a $2.7 billion market now than they were in a $5.2 billion market in 2006. The PILOT bill would have prohibited the casinos from appealing their assessments for 15 years.
But Moody's Investors Service recently warned that the PILOT bill alone wouldn't be enough; the agency said Atlantic City faces a $34 million budget shortfall in 2017 when temporary aid ends.
Atlantic City is currently wrangling with the Borgata Hotel Casino & Spa over $161 million in tax refunds the city owes from past appeals the casino won. Guardian suggested having to pay that much could force the city into bankruptcy.
The city plans to hold a tax sale of $12 million in unpaid taxes owed by bankrupt Trump Entertainment Resorts. On the plus side, the former Revel casino, which also had been in arrears, paid $4.3 million in late November to get itself current on taxes.
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