Both Asbury Park Press and Bergen/NorthJersey Record published this guest opinion column by our Executive Director Seth Grossman. Click here for link to Asbury Park Press.
Fourteen months ago, former Governor Christie made West Orange attorney Jeff Chiesa his “deputy” with extraordinary powers to run Atlantic City. So far, taxpayers paid $4 million to Chiesa’s law firm. Christie said Chiesa’s law firm “produced phenomenal results” and “turned Atlantic City around”.
While most surviving casinos and their employees are doing well again, most others in Atlantic City are not. Former Governor Christie did not create Atlantic City’s problems. However, he made them a lot worse.
When Christie became Governor in 2010, Atlantic City taxes were so high that even casinos could no longer afford them. Five of them shut down. The Sands Casino blew up its empty building in 2007 to get it off the tax roll.
Atlantic City had high property taxes because for 30 years, casinos paid roughly 80% of them. Also, state law did not let casino owners or employees participate in politics or even publicly complain about the taxes they paid. Voters and politicians in Atlantic City did not care about tax hikes when casinos paid 80% of them, but were powerless to do anything about it.
Atlantic City’s casino economy crashed in 2007. When Chris Christie became governor in 2010, real estate in Atlantic City had already lost two thirds of its value. Everyone in City Hall knew the old game was over, and that big cuts in staff and salary were needed.
Governor Christie could have easily fixed Atlantic City in 2010. New Jersey’s “Local Budget Law” forces every town to adopt a balanced budget by April of each year. When Atlantic City failed to balance its budget in 2010, Christie’s Director of Local Government Services got a court order, and took control of the City’s finances.
Everything the Chiesa Law Firm did during the past 14 months for $4 million could have been done for almost nothing by the state’s Director of Local Government services back then.
Instead of breaking expensive old union contracts in court like Chiesa did last year, the State could have forced the City to make affordable new union contracts to begin with during the past seven years.
However, Christie did not do that. In 2010, Christie was already running for President. He wanted to be praised by Democratic union leaders. He did not want messy showdowns battles with public employees over layoffs and pay cuts.
Christie’s officials instead agreed to business as usual union contracts with regular pay hikes during most of the next six years. Atlantic City’s local budget went from $211 million in 2010 to $262 million in 2015. (It was $38 million when the first casino opened in 1978!) Public school spending went from $163 million or $24,142 per pupil in 2010 to $196 million or $27,411 per pupil in 2015.
State officials also routinely approved budgets that grossly inflated expected tax collections. They let Atlantic City spend roughly $80 million more than it took in during almost every year Christie was governor.
In just seven years, the state helped Atlantic City borrow more than $400 million. The cost of paying that money back with interest is now $29 million per year.
Jeff Chiesa has extraordinary powers. He can cut current expenses like salaries. However, he does not seem to have the power to cut debts run up in previous years. Can Chiesa’s spending cuts save enough money to pay back that seven year accumulation of debt without another round of tax hikes? Only time will tell. -30-
TAG LINE: Seth Grossman is a Somers Point attorney, and President of LibertyAndProsperity.com. He ran against Chris Christie in the 2013 Republican Primary and got 8% of the vote. He was an Atlantic City Councilman and Atlantic County freeholder in the 1980’s.
Seth Grossman, Executive Director
Liberty and Prosperity 1776, Inc.
453 Shore Road
Somers Point, NJ 08244