A.C. impasse deepens; workers to get IOUs during shutdown

The crisis over Atlantic City's tapped-out cash reserves intensified in a 10-hour war of words Thursday, with the governor, mayor, and Assembly speaker all digging in to a stalemate that could shut City Hall from April 8 to May 2 and threatens to send the city off a financial cliff.

But first, this being A.C., a word about the city's big Beer Fest, also scheduled for April 8: It's still on.

In fact, said Mayor Don Guardian, nearly all 900 city workers, including police, fire, and public works, have agreed to work without pay when a broke government folds its cards for three weeks.

He said essential employees will receive an IOU and get paid after the city collects its quarterly taxes in May.

Tourists, he said, should not see a difference.

"It's not going to look any different than today, except that 20,000 people will be in town for the largest beer festival on the East Coast," Guardian said.

Meanwhile, the blame game ricocheted around the state Thursday, as the governor continued to seek a full state takeover against Atlantic City's wishes, Assembly Speaker Vincent Prieto continued to resist any bill that would tamper with collective-bargaining agreements, and Guardian placed blame for the crisis on Christie.

"He's absolutely shutting us down," Guardian, a Republican like Christie, said to a room full of cameras and reporters, flanked by City Council President Marty Small, three councilmen, Fire Chief Scott Evans, Police Chief Henry White, and others. He held a 2 p.m. news conference, an hour after one held by Prieto, and six hours after Christie went on local radio to stake out his position on the takeover.

"We will run out of money April 8 because the governor has withheld $33.5 million," Guardian said. "There's no one else to blame here. The money is coming from the casinos. Yet the governor has decided he's not going to help us."

Guardian was referring to casino tax money the state promised to redirect to Atlantic City to plug its current budget. The tax has previously been used to pay for a citywide marketing effort known as the Atlantic City Alliance. Christie has twice vetoed the aid and now says he won't approve it without a takeover. The casinos have said they will start spending the money on marketing May 1 if there's no bill saying otherwise.

The state also refused to float the city an $8.2 million bridge loan, Guardian said. He noted the city gets far less state aid than other cities. Guardian said the city would still make a $7 million tax payment to the schools and would meet an April 1 debt payment. He called those decisions "ethical" but warned the city would eventually run out of cash.

The state would then have to pay all the bills, he said.

Or, said Small, "it'll be time for some bankruptcy problems in Atlantic City."

Speaking on local radio station WPG on Thursday morning, Christie said only a full takeover would give the state the tools it needs to solve the crisis. He said despite previous cuts, and five years of state oversight, city leaders had not proven they were capable of fixing the problem.

"When you have a city in that position, you have to come in and take aggressive steps," the governor told host Harry Hurley. "You have to say to mayor and council: You've failed."

In escalating rhetoric aimed at Wall Street, Christie warned bondholders, who hold $240 million in Atlantic City debt, to be prepared to renegotiate those debts. "Bondholders who hold debt to the city are going to have to make sacrifices as well, as is the casino industry," Christie said.

Guardian, however, said the state was supposed to have renegotiated that debt in the last year but did not.

"The governor - when he spent $2.6 million for the emergency manager - was supposed to restructure our debt of $240 million, and the money we owe Borgata," Guardian said. "We were told to walk away and the state was going to bring in high-powered professionals. One year later, they walked away."

Guardian also pushed back on some of Christie's strongest words, noting major concessions by the city's police and fire unions, and saying the police chief of Camden County, the state-ordered county force, makes $230,000 a year. Christie had called out White, Atlantic City's police chief, for a $212,000-a-year salary. Guardian said the city has raised fees, cut budgets, and shared services.

In Trenton, Prieto said the state already had authority to stave off Atlantic City's financial disaster without takeover legislation.

"For anybody to say that Atlantic City is being held hostage, I would quite say the opposite," Prieto (D., Hudson) said at the Statehouse.

Citing a decades-old law, Prieto said: "If some municipality was going to default on their bonds, the state has an obligation and has the mechanism to actually step in.

"Saying that, the governor has the tools that he needs to actually make Atlantic City come out of the woods on this problem," Prieto said.

Christie supports legislation that passed the Senate that would give the state broad control of Atlantic City's government, including the ability to amend or terminate collective-bargaining agreements.

Prieto has rejected that approach, describing it as unfair to police and fire unions. Pat Colligan, of the state Policemen's Benevolent Association, said the city's Police Department employs 285 officers, down 25 percent from 2012. The budget has been cut by $9 million (or 20 percent) since 2014, thanks to "good faith" negotiations between the city, state monitor, and local PBA.

Starting and top salaries for patrol are lower, and there are more steps. "I'd be much happier going to a bankruptcy judge than this governor," Colligan said.

Prieto rejected Christie's stance. "To tell me and dictate to me that you're not going to change one word, I say that's preposterous," he said. "You need to ask why he's not using his authority," he added, questioning Christie's motivations.

Even as Prieto sought to take on Christie, he faced a new fight in his own caucus. Assembly Majority Leader Louis D. Greenwald (D., Camden) told Politico on Thursday that the Senate takeover bill would pass the lower chamber. Prieto said that wasn't true.

Christie spokesman Kevin Roberts said: "With confirmation from Assembly Majority Leader Lou Greenwald this morning that the Atlantic City takeover bill has the votes to pass the Assembly, we urge the speaker to post it for a vote."

In a barrage of emails, tweets, and posts on his website ("Ask Speaker Vincent Prieto Why He's Blocking Bipartisan Legislation," with two phone numbers to call), Christie said he would not pass aid bills without a full takeover, and would not sign any bill if it was changed in any way. Guardian said Christie was "dead wrong" on the takeover.

"There's no reason to shut down Atlantic City," Guardian said. "It's bad for the poor guy over there who owns Ducktown Tavern, because people are going to be afraid of coming in for a beer and some shots."

He was referring to Johnny Exadaktilos, who employs 42 people at the neighborhood institution, one of the few places that stayed open during Hurricane Sandy.

arosenberg@phillynews.com

609-823-0453 @amysrosenberg