Atlantic City mayor: City Hall will close April 8
Atlantic City Mayor Don Guardian warned state legislators the city is close to the point where it will no longer be able to pay city workers and will default on its bond payments. Police officers and other city workers said they would continue to work without paychecks, which could be as early as April 8.
Atlantic City Mayor Don Guardian said the city will close City Hall and cease all non-essential services on April 8 at 4:30 p.m. "due to financial circumstances beyond our control."
The closure will remain in effect until at least May 2, when the city expects to receive next payment of quarterly taxes, the mayor said. The city had been seeking a bridge loan from the state Local Finance Board on Monday.
"We are working to ensure that all essential services will continue to be provided from April 8th through May 2ndto the residents of Atlantic City. Essential services are identified as Police, Fire, Revenue collections, and some divisions in Public Works," the mayor said.
"All non-essential services will be ended and closed effective Friday, April 8th, 2016 at 4:30pm.," the mayor said.
At a forum on possible expansion of casino gaming to North Jersey, Guardian blamed the shut down on the failure of Gov. Christie to sign an aid package that would have delivered $33.5 million promised by the state when it approved Atlantic City's current $262 budget.
"The choice was keeping schools alive and making payments for bonds," Guardian said. "If we defaulted on our debt, every other municipally in this state would have a tough time borrowing.
"We're making some ethical decisions," he said. "Unfortunately that means closing down the city. Fortunately our police and fire have agreed to work."
The statement continnues:
"Both essential and non-essential service employees will not be paid their salary during this closure period. Please note, however, health benefits will remain active for all Atlantic City employees during this period.
"We are greatly aware of the potential impact this will have on all of our employees. We are making every effort to find solutions prior to the April 8th deadline. As more information becomes available, we will make sure to share it as soon as possible.
"The City of Atlantic City is grateful for your continued service and support."
The Mayor said, the City is in discussions with the State to avoid and forestall what may be an imminent financial predicament.
The Governor's office referred a request for comment to remarks he made last Tuesday in Linden, when he said, "I am not going to put any Band-Aids on Atlantic City anymore ... And I am not going to be held responsible for fixing it if I am not given the tools to fix it."
Christie said he would only sign an aid package if it was accompanied by a state takeover, which has been opposed by city officials and State Assembly Speaker Vincent Prieto, who objects to undermining collective bargaining agreements.
A spokesman for State Sen. President Stephen Sweeney, D-Gloucester, who introduced the takeover legislation, declined to comment, as did Borgata, which is owed more than $150 million in tax appeals from the city of Atlantic City, and skipped its last $7.2 million tax payment with the ok from a judge.
Atlantic City's public employees have been told April 8 could be their final paycheck as the city reaches the brink of insolvency.
Mayor Don Guardian warned legislators Monday in Trenton that the day was nearing when it would no longer be able to pay its employees and would default on its bond payments. Chris Filiciello, his chief of staff, said Monday afternoon that without additional money or a loan, the city will be unable to make payroll after April 8.
"Bankruptcy will effectively kill one of of New Jerseys most iconic cities," Guardian said in testimony to the state assembly budget committee, according to a copy of his testimony provided by his office.
Guardian was also scheduled to meet with the Local Finance Board director to discuss ways to stave off that breaking point, including the possibility of a bridge loan. At the end of 2014, the state loaned Atlantic City $60 million so it could continue paying employees. That loan has been paid back.
Guardian warned legislators that the city's financial "day of reckoning" was imminent.
"I don't see how that day of reckoning is in anyone's interest but yet it seems as if the State is hell bent on playing a real life game of chicken with our city," Guardian said.
He urged them to pass the bill that establishes a fixed payment in lieu of real estate taxes for casinos (the so-called PILOT bill), and redirects about $60 million in other casino taxes currently directed at marketing to help the city pay off its debts.
The city currently owes Borgata Hotel and Casino more than $150 million from successful tax appeals, and is carrying about $350 million in municipal bond debt.
A 45 day period of mediation between Borgata and the City and State, ordered by Superior Court Judge Julio Mendez, ran out Monday, but Chris Filiciello, chief of staff to Mayor Guardian, said Monday the talks were ongoing.
Borgata skipped its last tax payment of $7.2 million to the city, after Mendez ruled the casino could do so lawfully because they are owed the back taxes from the city. Borgata general counsel Joe Corbo declined to comment Monday on whether the casino would continue to withhold tax payments and on whether the casino would withhold them under a PILOT system if adopted.
The state Senate passed both the PILOT bill and a bill authorizing a comprehensive state takeover of Atlantic City government. Guardian opposes the takeover and says an alternative "partnership" could help stave off bankruptcy.
Guardian said without help from the state from the PILOT and related bills redirecting revenue, the city will in fact go bankrupt.
"If the State forces Atlantic City into bankruptcy, we will not be able to pay our police, fire and city employees, we will not be able to clean the streets.…bankruptcy will effectively kill one of New Jersey's most iconic cities," he said.
Guardian said a bankruptcy would also have consequences throughout the state, negatively impacting the bond rating for every municipality and increasing the cost of future borrowing.
"If the state forces Atlantic City into bankruptcy, we will default on our debt payments, further weakening our struggling casinos," Guardian said.
"The residents of Atlantic City are being threatened - either accept State domination or go bankrupt," he said in testimony. "We grow increasingly nearer to the day when we cannot pay our employees or when we default on a bond payment.
Atlantic City Police Officer Keith Bennett, who is the state delegate for Atlantic City's Police Benevolent Association, Local 24, said officers have indicated they would even without a paycheck. He said the feeling among officers is that Guardian has dealt with them in good faith, and that they would, in turn, have his back.
The union has opened its collective bargaining agreements with Guardian, negotiated give backs, cut their ranks to 285 from last year's 330 (and a high of 424 in the '90s). They are resisting a state takeover that could lead to a county-run force or a unilateral new contract. State Assembly Speaker Vincent Prieto has said he will not advance a state takeover bill that includes the authority to do away with Collective Bargaining agreements.
Bennett said city employees have become the pawns in this game between the governor, state legislators and the city.
"A lot of people are paycheck to paycheck," he said. "It will affect people in one way or another, mortgage payments, car payments. Some people in public works are making $25 or $26,000 a year, that's poverty line stuff."
He said the unions and the city had worked to cut budgets and payroll costs and continue to do so.
"I wish I had a crystal ball to know what's going on in Chris Christie's head right now, because i don't get it," he said. Christie has twice vetoed aid to the city, even when it did not involve state aid, just the redirection of casino money, and is insisting on a takeover bill that would allow the dissolution of collective bargaining agreements.
"It's a political game," Bennett said. "Unfortunately the people of the low end of the spectrum are the ones paying the price. Everyone I've spoken to is going to continue to work. There's been the threat of the state police coming in. We don't need them."