When Don Guardian campaigned to be mayor, Atlantic City had lost two-thirds of its tax base, and often could not make payroll. Guardian at first promised to be a “one term mayor”. He said he would be “unpopular” in doing what was needed to bring spending and taxes under control. Yet soon after winning the election in November, 2013, Guardian promised “no layoffs” — even for last minute political appointees hired by previous mayor before leaving office! Guardian also spent much of the first four months after his election planning a lavish inauguration ball. It was paid by “donations” from New Jersey’s biggest “pay to play” lobbyists and special interests.
Don Guardian’s “Inauguration Ball” included this outside fireworks display. How could anyone even bring up the subject of layoffs and givebacks with City employees while doing this lavish event? Photo by Ben Fogletto of Atlantic City Press.
Don Guardian was a horrible mayor who killed any hope of an Atlantic City recovery with $400 million of unsustainable debt, and tax rates that have reached confiscation levels.
When Mayor Guardian took office in January 2014, Atlantic City had lost two thirds of its tax base. Yet the City and its public schools were still spending the same amount of money each week as they did during the height of the casino boom! This was in complete violation of the Local Budget Law which requires every city, town and school district to have a balanced budget.
Guardian kept doing that during his first two years in office. In 2016, Guardian did not even propose any City Budget until our organization sued him! When Guardian finally introduced his budget that was due in early April, it was already September and three fourths of the City’s money was already spent.
The debts Mayor Guardian incurred to fund these illegal deficits boosted Atlantic City real estate taxes to levels that are unsustainable for most non-casino home and business owners. Casinos, Bass Pro Shop, 108 shops at the Walk, and roughly 2,000 public and “affordable” housing units make “Payments In Lieu of Taxes (PILOT)”. They do not to pay any of that debt.
Tax rates in Atlantic City are now so high, that many property owners now find it cheaper not to pay their taxes, and let the City foreclose on their properties in 3 or 4 years. Meanwhile they do business or collect rent without paying for any taxes or repairs. These are called “confiscation” tax rates. As fewer people pay taxes, rates go up even more.
When the City lost two thirds of its tax income, Mayor Guardian refused to cut spending. He kept salaries and spending at the same levels as during the casino boom years. He did not even lay off the political appointees hired by the preceding mayor just before leaving office! At first, Mayor Guardian “balanced” his budget by letting the City’s tax assessor tax casino properties for far more than what they were worth. When the casinos appealed, Guardian paid big fees to lawyers to prolong the cases. When the casinos won their appeals, Atlantic City had to pay hundreds of millions in refunds.
Later, Republican Governor Chris Christie allowed Mayor Guardian to borrow money for operating expenses, in direct violation of the New Jersey’s Local Budget Law. That law requires balanced budgets. City governments in New Jersey can only borrow money for things like buildings, equipment, and street improvements. The law does NOT allow them to borrow for “operating expenses” like salaries.
During 2016, Mayor Guardian failed to pay roughly $38 million for employee health benefits and pension contributions that came due. He then made false public statements and signed fraudulent budget documents to hide it for more than a year. Then the City had to pay the money back to the state at 8.5% retroactive interest!
When Atlantic City taxes got so high that even the casinos complained that they could not afford them, Guardian agreed to state legislation that gave them tax breaks. This was in direct violation of the New Jersey State Constitution which requires that all real estate be “be assessed equally and taxed at the same rate”.
New Jersey’s State Constitution does allow certain exceptions. For example, tax reductions can be given to veterans, senior citizens, farmers, and for “redevelopment” of “blighted” areas.
To give the casinos these tax breaks, Mayor Guardian and state legislators declared Atlantic City casinos to be “blighted” areas “in need of redevelopment”.
During Guardian’s last year in office, Republican Governor Chris Christie appointed the law firm of his friend Jeff Chiesa to “oversee” Atlantic City’s finances. Chiesa’s law firm billed and received roughly $7 million in fees from Atlantic City taxpayers. Many of those fees were excessive and improper. For example, Chiesa billed the City at lawyer rates for lawyers who did non-lawyer work. Chiesa never set up an office in City Hall. His employees billed the City top dollar for driving between Atlantic City and Chiesa’s North Jersey law offices. Chiesa billed Atlantic City taxpayers for having more than one of his employees at the same meeting. Don Guardian did not challenge any of these bills, and paid each of them in full.
At one time, public officials who spent public money in violation of New Jersey’s Local Budget Law were prosecuted and removed from office for “misconduct in office”. However, Republican Governor Chris Christie was running for President at the time. Christie’s main rival at the time was Wisconsin Republican Governor Scott Walker. Walker had been viciously attacked by Democrats for cutting spending and limiting the power of government employee unions. Christie wanted to prove that he had bi-partisan support from Democrats and public employee unions in New Jersey. He did not want problems with layoffs and cutbacks in Atlantic City.
Ironically, New Jersey State Government now has roughly $250 billion of state debt and pension obligations. That debt is forcing a new round of tax hikes that are also unsustainable. In short, New Jersey State government today is in the same financial mess that Atlantic City was in when Don Guardian became mayor of Atlantic City seven years ago.
Don Guardian’s four years of blatant disregard for New Jersey’s budget laws put Atlantic City’s 42,000 citizens $400,000,000 in debt. Some form of bankruptcy, repudiation, or insolvency is the only way to bring Atlantic City real estate taxes down to affordable and sustainable levels. Should that disqualify Don Guardian from being a legislator at the state level?
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Seth Grossman, Executive Director