Last night (Wednesday, August 17), City Council finally pushed back against 6 years of lawless, dishonest, and secret mismanagement of Atlantic City government by state officials under Republican Governor Chris Christie.? Last night, City Council rejected demands by state officials to?dissolve its water utility so it could be taken over by the state.? It also rejected state demand that City immediately pay state government $31 million for health and pension benefits that? state illegally allowed it to “defer” for previous 7 months.???
This was made possible by the lawsuit we pursued since last April.??? In it, we demand nothing more than that?city and state officials comply with the Local Budget Law.?? That law requires every?city, township, and county government in New Jersey to adopt a “cash basis”, balanced budget by March 20 of every year.????
For past six years, state officials ran Atlantic City in gross violation of that?Local Budget Law.?? Each year, they delayed making any budget until the end of the year –after the City?illegally spent?$80 million more than it took in. This year, the deficit increased to $106 million! ? As a result, Atlantic City government is now more than $500 million in debt.? It borrowed most of that money by issuing junk bonds through politically connected Wall Street banks.????To make matters worse, the State gave big tax breaks to all 8 casino hotels which used to pay 62% of Atlantic City taxes.?? Because 110 outlet shops and restaurants, and 4,500 ?affordable? housing units already pay ?PILOT? (Peanuts in Lieu of Taxes), only about 25% of properties still pay normal real estate taxes in Atlantic City.
If we do not change things, the mostly middle class owners of 25% of the properties in Atlantic City will have the burden of paying back this $600 million debt by themselves.
At a hearing of our case in in Atlantic City last week,? Superior Court Judge Julio Mendez rejected arguments by?State officials that they had the expertise and discretion to relax requirement of the Local Budget Law.???? “You are not Congress.? You can’t just make continuing resolutions year after year.?? We have a statute.? You have to make a budget,” Judge Mendez stated during the hearing.?? City officials then agreed to submit a budget last Monday.??? They missed that deadline, but did introduce a budget yesterday.
In that budget, State officials apparently agree to give Atlantic City?$106 million of state grants to? balance its budget.???If those promises are kept, Atlantic City property owners will have no tax hike other than the 8% hike previously approved by the Atlantic City Board of Education.??? However, documents legally binding on the state to pay that money to Atlantic City were never produced during the council meeting
As a result, most City Council members refused state demands to adopt “emergency”? spending resolutions to dissolve its water utility so it could be sold by the state , and to borrow $31 million?to pay for health insurance and pension benefits, even though the state had agreed to give the City more than that in grants.??? City Council members Jesse Kurtz, Frank Gilliam, and Moisse DelGado expressed concern that if they did this, the state might back out of its commitment to pay Atlantic City $106 million, and that the City would have no way force payment.??? Last September, state officials promised Atlantic City? a grant of? $33.5 million to balance its budget last year–but never delivered.
What is our final goal??? Founding Fathers Thomas Jefferson and John Adams were bitter rivals, but they both agreed that “perpetual debt” is the enemy of both liberty and prosperity.?? At some point, Atlantic City government, like the Federal government, must stop spending more than it takes in.? That means big cuts in spending and debt.?? At this late stage, this can be done only by breaking unsustainable civil service rules and public employee union contracts. ?? It also means paying pennies on the dollar on Wall Street bonds. ? This can only be done? through special state insolvency laws, or federal bankruptcy laws.??? So far, Republican Governor Christie and Democratic legislators are demanding big cuts from Atlantic City budget, but refusing to give local officials the power to make them.?? Hopefully, our lawsuit and our public education campaign can change this.?? But we need your help!
Seth Grossman, Executive Director.