Atlantic City got a lifeline by New Jersey lawmakers Thursday.
The state Senate and Assembly passed a compromise rescue package that allows the Jersey Shore gambling hub to avoid an immediate default by providing a bridge loan.
The economic recovery legislation also provides the distressed city 150 days to plug its more than $80 million budget deficit and prepare a five-year financial plan. If it doesn't a state intervention plan will take effect. Both Assembly Speaker Vincent Prieto, D-Secaucus, and Senate President Steve Sweeney, D-Gloucester, have expressed confidence that Gov. Chris Christie will sign the bill.
"It's something that it gives them the tools to be able to be successful," said Prieto after the Assembly approved the bill. "This is something that now the administration of Atlantic City can roll up their sleeves with their workforce and I think we're giving them an opportunity to again be the jewel of New Jersey."
Both chambers of the legislature also passed a companion bill enabling Atlantic City's eight remaining casinos to make fixed payments in lieu of property taxes for 10 years. The initial PILOT legislation that Christie vetoed in November called for casinos to contribute $30 million collectively to the city in 2016, but a new amendment approved Thursday has the PILOT program begin in 2017. All casinos have made their 2016 tax payments except for the Borgata, which is in litigation with the city over $170 million in tax refunds owed to the casino-hotel.
Sweeney said the city's recovery plan, at his insistence, could also authorize the use of early-retirement programs for city workers to minimize the impact of workforce cuts. The city would also be required to make full obligated payments to schools and Atlantic County.
"This plan gives Atlantic City the opportunity to do the job itself to prevent bankruptcy and make desperately-needed financial reforms," Sweeney said. "Along with the reforms, this plan will provide financial resources and the ability to access the financial markets, which is critically important for long-term fiscal health."
Sweeney said that in addition to PILOT payments, the legislation has casinos pay $30 million collectively for the first three years followed by $15 million in year four, $10 million in the fifth year and then $5 million annually the following five years. The individual PILOT amount for each casino would be based on its share of total gambling revenue. The additional payments would be used to pay down Atlantic City's debt through the reallocation of the receipts collected by the Casino Redevelopment Authority from the casino investment alternative tax, Sweeney said.
The rescue package was approved three weeks after Standard & Poor's downgraded Atlantic City to CC from CCC-minus citing a high likelihood of default "even under the most optimistic circumstances." Moody's slashed Atlantic City two notches to Caa3 in April and estimates it has more than $400 million in debt outstanding. The city made its $1.8 million May debt service payment and next owes $1.6 million on June 1, according to Moody's.
Marc Pfeiffer, assistant director of Rutgers University's Bloustein Local Government Research Center, said Atlantic City officials should have resources to balance the budget with revenue from the rescue package and PILOT bill. He said the city will also likely seek additional savings from labor contract negotiations, shared services and selling off city assets such as its former municipal airport, Bader Field.
"They have bought five months of reprieve to get their cash flow," said Pfeiffer. "During these next five months the city has some substantial challenges."
The press office for Christie could not immediately be reached for comment, but the Republican governor said Wednesday night during a radio show that he will quickly decide whether to sign.
"All the authority I would need is in there," said Christie, who previously pushed for an immediate state takeover.
Atlantic City Mayor Donald Guardian could not immediately be reached for comment. The first-term Republican mayor said Tuesday he supports the comprise legislation.
