State must act now to save Atlantic City

Five years ago, despite Atlantic City facing ever-increasing competition from casinos and racinos in Pennsylvania, Delaware, New York, and other states, we decided to bar casinos in North Jersey for at least five years in order to give Atlantic City a chance to reinvent itself as an overall resort destination, as Las Vegas did.

By the summer of 2014, it was clear that was not happening. The Atlantic Club had already closed, with Revel, Showboat, and Trump Plaza soon to follow, putting 8,000 casino employees out of work, devastating the local economy, and driving up housing foreclosures to the highest rate in the nation.

From a statewide standpoint, total casino tax revenue had plummeted from a high of $500 million in 2006 to just $220 million, endangering programs for senior citizens and the disabled and sapping the state budget, Tens of thousands of New Jersey gamblers who used to go to Atlantic City poured over the borders to casinos in Pennsylvania and New York that were a short drive from their homes.

Atlantic City ratables plunged by 72 percent, threatening massive property tax increases and pushing the city toward an unprecedented bankruptcy that would have severe ramifications for at least a dozen other New Jersey cities and for the state.

Unfortunately, Gov. Christie this week vetoed legislation designed to stabilize casino tax payments to the city, and the city government seems paralyzed — unwilling or unable to take the budget actions needed to keep the city afloat.

Doing nothing is not an option. The choice is clear: We cannot afford to let Atlantic City go bankrupt. Anyone who believes that Atlantic City would be better off left to its own devices would be dooming the city to a slow and inescapable death spiral.

That's why I am pushing for a comprehensive strategy that would bring casinos to North Jersey, link those casinos to Atlantic City casinos through cross-ownership to maximize joint marketing, and direct up to $200 million a year in North Jersey casino revenues to a public-private partnership to turn Atlantic City into a year-round tourist destination like Baltimore's Inner Harbor.

At the same time, we need to stabilize casino tax payments and give the state the authority to manage Atlantic City's finances to keep the city solvent while we reinvent it from a struggling casino city to a marquis resort.

This is a win-win solution not only for Atlantic City, but also for South Jersey and for the state as a whole, despite the understandable worries and well-intentioned opposition of local officials and legislators.

First, the two North Jersey casinos will create 12,000 jobs and up to $5 billion in new private investment; in fact, we are requiring a minimum of $1 billion in private investment as a condition for applying for one of the casino licenses.

While there already is oversaturation in the Northeast's casino market, these two casinos will do well because the goal is primarily to keep New Jersey gambling revenue in-state. As Moody's noted in a recent analysis, people do not drive past an existing casino to get to a comparable one 30 miles farther away.

These casinos will provide hundreds of millions of dollars more in state revenue for programs for senior citizens and the disabled, and they will provide up to $3 billion over the next 15 years to redevelop Atlantic City as a destination resort with a diverse business sector that will anchor the Jersey Shore economy and create jobs. Without revenue redirected from the North Jersey casinos, this reinvention would be impossible.

Second, we are requiring that each of the new North Jersey casinos include a 51 percent ownership interest from existing Atlantic City casinos to ensure that the new casinos cross-market directly with Atlantic City. This is not a new idea: Pennsylvania's Gaming Commission barred an applicant from getting one of two Philadelphia-area licenses because its ownership had three Atlantic City casinos, and Pennsylvania did not want its casinos sending business — and tax revenue — to New Jersey. We want our North Jersey casinos to send their high rollers to Atlantic City for the weekend, not to the Poconos or Las Vegas.

Third, we need to take over Atlantic City's finances because the city government has blithely refused to make the difficult political decisions needed to balance its budget — even with the governor making his intentions clear by appointing a bankruptcy lawyer as emergency manager a year ago.

Atlantic City owes its bondholders more than $500 million, owes property owners more than $150 million for tax appeals, has no ability to borrow in the bond market, and faces a budget deficit of more than $100 million. Nevertheless, the city continues to spend.

The city government simply refuses to make meaningful cuts in an operating budget of $262 million for a city of 39,000 residents — a price tag of $6,717 per person that is three times the average for Newark, Paterson, Camden, and Trenton, all of which have service needs at least as challenging as Atlantic City and whose population swells just like Atlantic City's when tens of thousands of people come into those cities to work every day.

This takeover is limited to management of the city's finances for no more than five years — hopefully a lot less — just long enough to fully stabilize the city's finances and serve as a bridge to the redevelopment of Atlantic City by the new nonprofit we will set up.

If we want to restore Atlantic City as the "Queen of Resorts," we need to act now.

State Sen. Stephen Sweeney (D., Gloucester) is president of the New Jersey Senate. SenSweeney@njleg.org