Judge on A.C. money crisis: Magic wand is needed
ATLANTIC CITY - Superior Court Judge Julio Mendez refused a Christie administration request to block Atlantic City from paying its workers Friday and freeze the city's assets until it makes its next scheduled payment to the school district.
ATLANTIC CITY - Superior Court Judge Julio Mendez refused a Christie administration request to block Atlantic City from paying its workers Friday and freeze the city's assets until it makes its next scheduled payment to the school district.
Mendez said that aspects of the state's case "cross the line from the legal to the political," and that he worried about the municipal employees the state wished to leave without a paycheck, including people like "the clerk that works at Municipal Court who makes $28,000."
"I feel for them," Mendez said. "These people need to pay their bills."
And so, with an assist from Mendez, the nearly broke city by the sea made its regular $3 million payroll Friday (direct deposit cleared Thursday night) and averted a threatened shutdown.
In Atlantic City these days, even a city payday is breaking news. The next paychecks are scheduled for May 6, after quarterly taxes are collected. City unions agreed to switch from a two-week to a monthly pay schedule to help the city.
"My wife texted me this morning all excited," said Keith Bennett, state delegate for Atlantic City's Policemen's Benevolent Association, one of seven unions that agreed to the delayed payroll schedule to allow the city to stay open until the next quarterly taxes are due, May 2.
"My response was that we have to work on the budget now, because next check isn't due until May 6."
City establishments such as the Back Bay Ale House in Gardner's Basin said they would extend a free "burger, fries, and soft drink" to all Atlantic City Police and Fire Department members in uniform through April 21 "as a token of appreciation for our Atlantic City Police and Fire persons!!!" The Chelsea Pub is also offering on-duty police and firefighters complimentary meals, and representatives of a handful of businesses, including Goldstein's Funeral Home and Perry's Cafe, wandered into City Hall to pay their taxes early this week.
Michael P. Stinson, the city's revenue director, said that the early tax payments were not that unusual, and that the city had about $8 million in hand after paying its workers. The next school payment, of $8.5 million, is due April 15.
In the courtroom, Mendez said he based his rulings on "legal principles and human principles."
At Christie's behest, state Education Commissioner David Hespe filed a motion Thursday that asked Mendez to issue an order restraining the city from issuing paychecks Friday, but Mendez did not act on it. In court Friday, he declined to act on a similar motion that would have blocked the city from spending any money until its next school payment was made.
Mendez said there was no easy solution to the city's financial crisis, either in an Atlantic City courtroom or the Statehouse in Trenton.
"I really wish I had a magic wand to fix this problem," Mendez said more than once.
He noted the impasse in Trenton over promised aid to the city and continued state oversight.
"I desire that those two branches of government together with the municipality could come to a resolution," he said. "It seems to me the bottom line here is, there's not enough money."
Mendez set a return date of April 19 for a hearing, after the next payment for the schools is due.
Dan Dryzga, a deputy state attorney general, argued that the city should be required to set aside money that it will owe the school district on April 15 because of the "constitutional imperative on behalf of the children."
But Mendez said the city had complied with the schedule agreed to by the city, state monitors, and the school board, which declined to take similar action against the city when the state asked it to. The school board opposes the litigation.
Robert L. Tarver, who represents the Atlantic City Council, said any action to block the city from paying its workers would violate state and federal labor law. Mark Belland, representing the city's unions, also made that point to the judge.
Tarver called the state's case "intensely political."
"We're standing here in a false emergency," he told Mendez. "That's the reason you don't have the board here as a party."
Anthony Swan, the city solicitor, noted that freezing the city's assets would have the same effect the state says it is trying to avoid for city schools. The city pays for crossing guards and other services for schools, he said.
Stinson said the city also has about $16 million in a capital fund, but the city's attorneys told the judge they cannot legally use that money for operating expenses or to pay the school district.
As the city maneuvers to stay solvent, lawmakers in Trenton have been trying to work out a compromise financial rescue and oversight package, despite Gov. Christie's insistence that he would not agree to any compromise bill. Atlantic City elected officials have resisted a full takeover, and Assembly Speaker Vincent Prieto (D., Hudson) has refused to post a bill that would let the state terminate collective bargaining agreements. He posted an alternative Atlantic City oversight bill that would create a state-city panel and benchmarks, and allow the city's eight casinos to make a collective payment in lieu of real estate taxes.
Tax appeals by casinos have devastated the city budget, with the city owing Borgata Hotel & Casino more than $150 million, and carrying debt used to pay other tax appeals of about $240 million.
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