A.C. talks again dissolve into discord

TRENTON - New Jersey lawmakers on Monday appeared to make progress toward a deal to rescue cash-strapped Atlantic City, only to end the day accusing one another of subterfuge and naivete over the possibility that the iconic resort town might go bankrupt.

"We're going to try to put something on paper today," Assembly Speaker Vincent Prieto (D., Hudson) said early Monday afternoon after a private three-hour meeting of about 10 Assembly Democrats.

"We're pushing to get this done," Assembly Majority Leader Louis D. Greenwald (D., Camden) told reporters.

But any goodwill they might have built in meetings Friday and Monday appeared to dissipate after Prieto told reporters that he did not feel pressure to act quickly given the city's cash crunch, because "bankruptcy is always the other option that's there."

Greenwald later released a statement that he was "shocked and outraged" by the comments, adding that bankruptcy may have been Prieto's "goal all along."

Senate President Stephen Sweeney (D., Gloucester) called Prieto's attitude "horrible," and Gov. Christie said the speaker's "refusal to adopt a proposal that would avoid bankruptcy is incredibly irresponsible to the businesses, employees, and citizens of Atlantic City as well as to all other taxpayers in New Jersey."

Prieto said he had sought "a compromise for weeks, but anyone who feigns shock that bankruptcy is a last resort isn't being honest with themselves or the public."

Standard & Poor's last week downgraded the rating on the city's general obligation bonds - which already had dropped below investment grade - and said a default or debt restructuring appeared "to be a virtual certainty even under the most optimistic circumstances."

For weeks, Christie, a Republican, and South Jersey Democrats have clashed with Prieto, of North Jersey, over what role the state should play in helping Atlantic City.

Christie says the city of about 40,000 people will run out of money around May 15. It has a $100 million deficit on a $250 million budget and carries $550 million in debt, according to the state.

Christie and Sweeney are pushing for a takeover of the city government that would authorize the state to modify or end labor contracts, restructure debt, and dissolve agencies, among other things. That legislation passed the Senate in March, along with a payment-in-lieu-of-taxes system for the city's eight casinos that is intended to stem property-tax appeals.

Sweeney also has proposed giving the city until the end of the summer to develop a financial plan that it could implement to prevent a takeover.

Prieto says that plan would be unfair to public workers. He offered an alternative measure that would give the city two years to meet certain fiscal benchmarks before a committee of mostly state officials could take control. But he was forced to cancel a vote on his bill last week when he failed to line up the majority needed to pass it.

Monday's sparring continued what has become almost a daily Statehouse ritual involving Atlantic City.

Earlier in the day, Prieto said Greenwald had floated the possibility that Assembly leaders could meet with Senate leaders on Tuesday. Sweeney said he would not meet "until I see what they want to talk about."

It seemed unlikely that a radical new idea would emerge that could attract broad consensus. "This is about fine-tuning the existing discussions," Greenwald told reporters. "We've passed the point of compromise."

Greenwald said lawmakers on Monday discussed "giving the locals time to get their budget in order and have the state financially back them."

While Prieto had said his chamber would vote Wednesday on a new Atlantic City bill, he said that date could be pushed back for procedural reasons and to allow negotiations to continue.

In addition to saying the city may need to file for bankruptcy protection, Prieto added that he believed Christie already has the power under current law to help the city avoid financial disaster, an assertion Christie denied.

The debate over Atlantic City's future has been marked by a sharp North-South divide in the state Democratic Party.

Fresh evidence of that seemed to emerge over the weekend with the release of the legislative calendar for committee hearings on Thursday. Of the 34 bills up for a vote in various committees, just a handful are sponsored by South Jersey Democrats.

The Assembly speaker and Senate president have the power to determine which bills get posted for votes in committee hearings and on the floor of their chambers.

Prieto said there was nothing unusual about Thursday's schedule. "I would tell you, if you look up the sponsor, cosponsors, third sponsor, look through all that, I know there's got to be a mixture there."

He added, "I know everything's being scrutinized. It is what it is."

Asked if Prieto was trying to send a message to South Jersey Democrats, who do not support the speaker's bill, Greenwald said, "I don't know. If he is, it's not getting through."

"To us, it's a one-time occurrence right now," Greenwald said. "If it becomes a trend, then we'll be more concerned. Right now we're just working through these issues" on Atlantic City.

aseidman@phillynews.com

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@AndrewSeidman