The problem is the poison that is killing Atlantic City–and already making the rest of New Jersey sick.
By Seth Grossman. Published in Newark Start Ledger at: http://www.nj.com/opinion/index.ssf/2016/05/christie-sweeney_bandage_cant_stop_the_bleeding_op.html
Atlantic City government is like that canary in the coal mine. What is now killing Atlantic City is already making the rest of New Jersey sick. We need to identify and get rid of the poison — not give mouth-to-mouth resuscitation to the canary.
In 2007 Atlantic City’s 12 casinos had a gross “win” of $4.9 billion. In 2015, its eight surviving casinos had a “win” of $2.4 billion — less than half. During those eight years, Atlantic City real estate lost nearly two-thirds its value.
County, city and public school officials should have matched those losses with spending cuts. But for the next eight years, they did business as usual. Atlantic City’s budget went from $193 million to $262 million. Public school spending went from $16,482 per student per year to $27,411.
State officials “supervised” Atlantic City finances since February 2011. Between 2011 and 2014, they let Atlantic City borrow $101 million at junk bond rates to pay for this.
Last year, they let local officials completely ignore the state’s Local Budget Law. That law requires balanced budgets from all towns and counties by Feb. 10. Last year, the state let Atlantic City run without a budget until the end of September. Although it is now May, Atlantic City’s mayor did not even propose this year’s budget for discussion.
State officials approved a budget last year that failed to pay $39 million for employee health insurance and pensions — and which wrongfully assumed the city would get $33.5 million from a controversial bill later vetoed by Gov. Chris Christie.
Nine years late, it is refreshing to hear state leaders from both parties agree that Atlantic City government needs drastic cuts in spending. It is good that they now openly concede that state civil service laws, union contracts and Wall Street bond obligations do not allow the spending cuts that are needed.
If their proposed “rescue” legislation stuck to those issues, most people in Atlantic City would enthusiastically support it. But their legislation does not.
The package agreed upon by Christie state Senate President Stephen Sweeney (D-Gloucester) has a “P.I.L.O.T.” (“Peanuts” in Lieu of Taxes) tax break for Atlantic City’s eight casinos that has nothing to do with these problems. If approved, the casinos would not pay any local, school or county tax increases for the next 10 years.
Since the casinos now pay more than half of Atlantic City taxes and a quarter of county taxes, this would crush every other property owner in Atlantic County.
Article VIII of the New Jersey Constitution was designed to prevent this. All real estate is to be assessed and taxed equally. Exceptions can be made only for veterans, farmers, senior and disabled citizens, and “blighted areas in need of redevelopment.” The Christie-Sweeney legislation falsely declares that all eight casinos — the most valuable, luxury properties in Atlantic City — are “blighted areas.”
For years, Atlantic City’s casinos never had the clout to get deals like this. State laws strictly banned them from doing or saying anything even remotely political. All that changed in 2014 when the Casino Association of New Jersey spent a fortune to hire Optimus Partners as its lobbyist. One partner is Phil Norcross, brother of South Jersey Democratic power-broker George Norcross and union leader/U.S. Rep. Donald Norcross (D-1st Dist.). The other is Jeff Michaels, brother of Port Authority Police Lt. “Chip” Michaels of the Fort Lee-George Washington Bridge affair — both boyhood friends of our Republican governor.
Atlantic City is the canary in the coal mine. It is warning of what happens when governments pay employees (and union contractors with “project labor agreements”) more while most taxpayers are earning less. It is warning of what happens when they borrow and give tax breaks to hide or delay the effects of spending too much. Atlantic City may be an island, but its bell is tolling for thee.
Seth Grossman, the executive director of Liberty & Prosperity 1776 (libertyandprosperity.org), is a former Atlantic City Council member and Atlantic County freeholder, and ran in the 2013 Republican primary for New Jersey governor.