Giving ACUA a monopoly would lead to higher fees

By Seth Grossman, Political Columnist

Why not name taxes, surcharges after the politicians who levy them?

(Reprinted from the January 13, 2010 Current-Gazette Newspapers of Atlantic and Cape May Counties,

The Atlantic County Utilities Authority is asking Atlantic County officials for a monopoly of the trash business in Atlantic County.

Right now, only 17 eastern towns in Atlantic County use the ACUA to dump their trash. The fees paid to the ACUA are part of local property tax bills.

But six western towns ? Buena, Buena Vista Township, Estell Manor, Folsom, Hamilton Township and Hammonton ? save $13 per ton by dumping their trash in Cumberland County or at the Camden County incinerator.

Everyone will pay more if every municipality has to use only the ACUA. Competition forced the ACUA to cut its costs and fees; without competition, those fees will go back up.

Why does the ACUA suddenly need more money?

Republican freeholder chairman Howard ?Fritz? Haneman created the ACUA in 1969 as the County Sewerage Authority. He was the son of Vincent Haneman, who with Frank ?Hap? Farley beat the New Deal Democrats to keep Republicans in control of Atlantic County in 1937.

Fritz?s father soon left politics and became a judge. He ended up on the New Jersey Supreme Court. Farley became a senator, replaced Enoch ?Nucky? Johnson, and became the political boss of Atlantic County for 30 years.

In the 1970s the Democrats finally ousted Farley and took control. Democrat Dr. Joe McGahn, the brother of powerful attorney Pat McGahn, was senator; young attorney Steve Perskie was assemblyman, and Chuck Worthington was county executive.

Republicans controlled nothing but the county freeholders and the little Sewerage Authority they had created. That?s when Fritz Haneman took over the Republican Party. In 1976, he became president of the Sewerage Authority. Haneman greatly expanded the county sewerage system ? and the political contracts and patronage that went with it.

In 1977, Perskie challenged fellow Democrat Joe McGahn in the primary and took his Senate seat. While the Democrats were tearing each other apart, Haneman got Republican Bill Gormley ? then an unknown, struggling young lawyer ? elected to the Assembly. In 1982, Haneman brokered a deal in which Gormley moved up to the state Senate, while Perskie quit to become a judge right after being re-elected.

Democrat Jim Florio was elected governor of New Jersey in 1989. Besides doubling the state income tax, Florio required every county to have its own incinerator, garbage dump and recycling program.

Haneman saw the opportunity. In 1992, the Sewerage Authority borrowed $82 million to do these new jobs and changed its name to the Atlantic County Utilities Authority.

Haneman borrowed the money with expensive and risky ?revenue bonds? because Republican County Executive Dick Squires didn?t want to put county taxpayers at risk. Instead, the ACUA would pay back the bonds with profits from the new incinerator, dump and recycling center it would build with the money. The bondholders would bear the risk.

Somehow, the $82 million got spent, but the incinerator and dump never got built as planned. For a while, the ACUA spent a fortune to haul garbage to dumps hundreds of miles away.

The County at first gave ACUA a monopoly that let it charge high fees. But a federal court ruled that this violated the Commerce Clause of the U.S. Constitution.

At that point, the ACUA should have gone bankrupt like any other failed business. But that might have triggered investigations and possibly prosecutions on how the $82 million was spent.

So Gov. Christie Todd Whitman asked fellow Republican Freeholder Chairman Dennis Levinson to have the freeholders bail out the ACUA and guarantee the bonds with property tax money.

Levinson rammed the bailout through the freeholder board and was duly rewarded for his loyalty. He soon became county executive. For 15 years, state subsidies, trash and recycling income were enough to pay the bonds and reduce the debt to some $52 million.

But now the state is broke, nobody is buying our recycled stuff, and the casinos have fewer customers and less garbage. Income is down, but the ACUA still needs $5.5 million per year to pay back the debt.

What to do? First, let?s admit that this is a Wall Street-type bailout, not a ?waste management? problem. The ACUA bonds are already rated as junk. The county, like Donald Trump, should make a deal to pay less than full value. But if Atlantic County taxpayers are legally stuck, let?s be open and honest about it. Let?s add a ?Dennis Levinson bail-out surcharge? to every property tax bill. This would be a great learning tool for every politician.

Somers Point attorney Seth Grossman appears live on WVLT-92.1FM, heard throughout South Jersey 8-9 a.m. every Saturday. For information see, email or call (609) 927-7333. Breakfast discussions are held 9:30 to 10:30 a.m. every Saturday at the Athena Diner, 1515 New Road, Northfield.

  • Seth Grossman

    Seth Grossman is executive director of Liberty And Prosperity, which he co-founded in 2003. It promotes American liberty and limited constitutional government through weekly radio and in-person discussions, its website, email newsletters and various events. Seth Grossman is also a general practice lawyer.

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