TRENTON - Gov. Christie on Monday vetoed legislation that was intended to stabilize Atlantic City's finances, saying it failed "to recognize the true path to economic revitalization and fiscal stability."
Spurning calls from the casino industry and Atlantic City Chamber of Commerce to sign the package of bills, Christie instead proposed changes that would exert greater state control over the resort town's future.
Senate President Stephen Sweeney (D., Gloucester) initially condemned the veto, but later issued a joint statement with Christie saying they had "agreed to immediately sit down together, with consultation of interested parties, to construct a final and fast resolution path for Atlantic City."
Christie, a Republican presidential candidate, praised legislative efforts to "provide important, near-term support to the city's immediate challenges," but said they did not "meet the goal of setting a course toward renewed, long-term prosperity and economic growth."
Sweeney said he was "concerned by the time that was wasted since the plan was put on [Christie's] desk close to six months ago."
"No one should ignore the fact that Atlantic City's financial crisis continues and that a comprehensive, forward-looking plan is needed to prevent fiscal conditions from getting worse," he said in a statement.
The city has been on the brink of financial collapse since losing four casinos in 2014 amid a general downturn in total casino revenue. Between 2010 and 2015, the city's property-tax base dropped 64 percent, from $20.5 billion to $7.3 billion in 2015. The city is carrying about $397 million in outstanding debt, much of it owed to Borgata and other casinos due to successful tax appeals.
The cornerstone of the legislative package was a bill that would require casinos collectively to pay $150 million annually to Atlantic City in lieu of property taxes for two years. For the next 13 years, they'd pay $120 million, though that could change based on gross gaming revenues.
The legislation called for the casinos to form a council that would determine how much each would pay the city, based on a formula enshrined in statute.
Christie's plan would eliminate that council and instead require the state's Local Finance Board, in consultation with the Division of Gaming Enforcement, to determine how much each individual casino must pay. The state would use a similar formula outlined in the vetoed legislation.
The division already regulates casino and track gaming revenues, and the Local Finance Board monitors the city's finances, along with an emergency manager hired early this year by Christie.
Instead of sending the money directly to Atlantic City, the casinos would give the money to the state. Christie's plan would maintain the general structure outlined for the next 15 years. Funds would be distributed to Atlantic City upon approval by the Local Finance Board. Atlantic City would be required to submit a plan to the state to "improve its financial condition and address its fiscal imbalance."
"Regrettably, many of the city's key stakeholders have failed to embrace the concepts of fiscal restraint and strong leadership, and instead have settled on a course toward self-preservation and vacillation," Christie wrote. "Equally regrettable are the provisions of this package of bills that simply shift resources to the city without requiring accountability on the part of those who receive the funds or those who benefit from the unique tax payment arrangements set forth in the legislation."
The rough dollar figures would not change under Christie's plan. The casinos would pay at least $120 million the first two years; an additional $30 million that casinos currently give to the Atlantic City Alliance marketing organization would be remitted to the state.
That money essentially would be held in escrow, but would be available to the city.
"Without these adjustments, the bills put before me by the Legislature will not set a course for renewed long-term prosperity, economic growth, and expansion in the region's tourism, entertainment, and gaming industries," Christie wrote.
Christie also conditionally vetoed a bill under which revenue generated from a tax on gaming currently allocated to the Casino Reinvestment Development Authority would be redirected to Atlantic City for it to pay debt service on bonds it has issued.
Under Christie's plan, the bill would take effect only if the Legislature passed his other proposal.
The Local Finance Board, which monitors the city's finances, approved a 2015 city budget last month, but that spending plan counts, in part, on money directed through the bills Christie conditionally vetoed - a $33.5 million line item described only as "Casino Redirected Anticipated Payment."
The $262 million budget, which included cuts to city payrolls and departments but no tax increases, also defers nearly $40 million in employee health and pension benefits.
The city owes Borgata $88 million from a tax appeal, which it is has been paying back in $150,000 monthly installments, with an additional $50 million under appeal. The casinos had agreed not to file future tax appeals if the payment-in-lieu-of-taxes (PILOT) system were adopted.
Christie on Monday also vetoed a bill that would require the holder of a casino license to provide "suitable" health-care and retirement benefits for all full-time employees covered by collective bargaining agreements. The bill says a "suitable" plan would be, for example, one that is "fully funded by employer contributions and that is commonly provided to full-time employees by the New Jersey gaming industry."
Atlantic City Mayor Don Guardian "will reserve comment until he reviews exactly what the conditional vetoes are that the governor was requesting," said Guardian's chief of staff, Chris Filiciello.
Borgata Hotel & Casino also had no comment.
Atlantic County Executive Dennis Levinson, who had raised objections to the bill amid concerns about the county's share of a new PILOT system, said, "Nobody's doing a victory lap."
"The governor made it pretty clear he wants a viable plan for the future of Atlantic City and felt that portions of the PILOT program did not meet his standards," he said. "I agree that it's a work in progress."
The Casino Association of New Jersey, which represents the eight surviving casinos in Atlantic City, issued a statement expressing disappointment with the governor's action and "imploring" the "necessary parties to quickly convene to resolve all open issues as soon as possible."