Gov. Christie refuses to sign Atlantic City rescue bills

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Republican presidential candidate Chris Christie speaks during the Fox Business Network debate at the North Charleston Coliseum, Thursday, Jan. 14, 2016, in North Charleston, S.C.

Gov. Christie refused to sign a package of bills Tuesday designed to plug gaping holes in Atlantic City's state-approved budget and stabilize the economic and tax situation in the seaside resort rocked by a cratering casino industry. 

The veto leaves the city with a $33.5 million gap in its budget and still fending off state elected officials storming its gates for a proposed municipal takeover. It also leaves them vulnerable to future damaging tax appeals from casinos, which have left the city at the brink of bankruptcy. Estimates have the city running out of cash by April.

"Bankruptcy is now back on the table," said Mayor Don Guardian in a statement.

Guardian said he could not explain the Gov.'s actions and when asked if characterizing them as Christie telling the city to "drop dead" _ as in the famous Ford to N.Y.C. 1975 headine _ he said that would not be an exageration.

"That's exactly what he said," Guardian said, following a meeting of the state's Casino Reinvestment Development Authority, of which he is a board member. "It's certainly very sad for someone running for public office to head up our country to try to double cross us and reneg on his word."

He said the city would fight the takeover. "We will not tolerate the stripping of our God-given civil rights and right to self-governance.  Atlantic City has worked too hard and has come too far to let that happen.  This above all, will be our priority."

State Sen. James Whelan, a sponsor of the bills, called Christie's actions "bizarre."

"New Jersey has joined Alice in Wonderland," Whelan said. "Gov. Christie has vetoed his own bills. Bills that he conditionally vetoed after months of silence from the governor. The legislature concurred with his version of the bills and now he is bizarrely vetoing them.

"Clearly our “tell it like it is” governor does not mean what he says," Whelan said.

The bills would have established a Payment in Lieu of Taxes system for the casinos for 15 years of about $120 million annually, preventing future appeals.

Christie's veto was a "pocket veto" in which he let the bills lapse by taking no action. But it has the effect of holding the rescue aid hostage to a takeover of city government, political observers noted.

Christie issued no statement explaining his failure to sign the bills. Instead, his press office referred reporters to statements he made in Fort Dodge, Iowa, in which he said he would consider the entire package: "If in total it makes sense, I'll do it, and if I don't think the package makes sense, I won't," he said in Iowa. "I've been in regular conversations with the Senate President and the Speaker for the last ten days to try to reach some accomodation on this. We reached an accomodation on North Jersey gaming. I hope we can reach an accommodation on this as well."

The so-called PILOT bills have been languishing for more than a year. They were designed to stabilize a recent history of volatile casino vs. city tax appeals, which left the city owing or paying large amount of tax refunds back to the very industries created to revitalize the city. The city hit the wall with Borgata, which is now owed about $160 million that the city says it can't afford.

 The Casinos Association of New Jersey issued a statement pleading for an "endgame" to the political maneuvering. 

"The uncertainty is adversely affecting the city, the industry and in turn the hardworking families and businesses which rely on the casinos for their livelihood," it said. " Moreover, this political uncertainty is sending the wrong message to stakeholders and Wall Street, further disrupting any investment that would strengthen Atlantic City’s revitalization." 

Christie's appointed emergency manager, Kevin Lavin, hired retired bankruptcy judge Donald Steckroth to negotiate with parent company Boyd Gaming, but no settlement has been disclosed. The city says it is no longer realistically able to access bond markets to borrow the money to repay Borgata. The city also has about $250 million in general municipal bond debt.

Guardian said the two sides _ Borgata and the city _ were before Atlantic County Superior Court Judge Julio Mendez Tuesday morning and that Mendez appeared motivated to broker a deal. Borgata had sued the city to try to force it to repay $60 million.

The bills, initially conditionally vetoed by Christie, were revised at the last minute by the legislature based on recommendations from Christie's emergency manager in Atlantic City that included additional state oversight.

The PILOT bills set out a base of $120 million a year for 15 years  for the eight surviving casinos to pay proportionately in a Payment in Lieu of Taxes system. The amount would increase or decrease based on gambling revenue and, under the revised bills, non-gambling revenue.

The bills also would have eliminated the Atlantic City Alliance, the DoAC group, which was funded with $30 million in casino revenue that previously went to horse racing. That money was to go through the state to the city of Atlantic City to pay off debts for the next two years. A total of another $50 million would have been required from the casinos over the following five years. 

Guaridan said Tuesday he planned now to ask the Casino Association, which is now compelled by law to continue a $30 million marketing investment, to send that to the city to be used only for police and fire services. "I'm suggesting that smart marketing is to keep the police and fire in place," Guardian said.

The bills also were to divert as much as $30 million of an Alternative Investment Tax, the casino tax that previously went to the state Casino Reinvestment Development Authority.

The city has been counting on the money in these bills to balance its budget, which was approved by its state monitors with a $33.5 million gap assigned cryptically to "Casino Revenue Alternative Payment" (CRAP). 

Guardian said the city would resist a takeover and had the backing of the League of Municipalities, American Civil LIberties Union, U.S. Conference of Mayor's and the NAACP. He did not rule out a legal action. 

And despite the city's dire straits, he said he was not ready to recommend bankruptcy.

He reiterate that the city has done everything proposed by the state's emergency manager, who brought in a team of accountants from Ernst and Young. "They're sitting across the hall from me, they're making recommendations. we're following them."

"When you say a state takeover, there has to be a hidden agenda," he said.

The bills were first proposed by Christie's own adviser on Atlantic City, Jon Hanson, in a report commissioned by the governor, which also put the emergency manager in place. They were also supported by Kevin Lavin, Christie's appointed emergency manager, whose one year contract expired last week.

The city is now fending off a legislative attempt to take over its government and sell off its assets, including the city's valuable Municipal Utilities Authority, sought after by private water companies, including the New Jersey American Water Co., represented by Philip Norcross, brother of South Jersey power broker George Norcross.

The city and casinos are both wary of further attempts to open up casino gambling in North Jersey, which analysts say would serve only to convert hundreds of millions in lost Atlantic City industry wages into promised tax revenue from North Jersey that would come back to the city for another vague redevelopment mission.

The bills were initially introduced in late 2014, but pulled by local legislators amid a dispute between would-be Trump Taj Mahal owner Carl Icahn and the union. The bills were subsequently reintroduced but were buffeted by new political winds propelling a North Jersey casino referendum and a full takeover proposal of Atlantic City.