Christie gets lawmakers' compromise A.C. rescue plan

TRENTON - The New Jersey Legislature on Thursday sent Gov. Christie a pair of bills that would give Atlantic City until late October to develop a five-year financial plan that likely would necessitate deep budget cuts even with state aid.

If city officials failed to submit a plan to the state within five months, or if the commissioner of the Department of Community Affairs determined the plan was insufficient, the Christie administration would gain the authority to take over the city's governing powers.

In that scenario, the state would be able to terminate labor contracts, restructure debts, dissolve agencies, sell most city assets, and fire employees.

The state would be able to intervene at any point over the next five years if the city failed to submit a balanced budget or otherwise breached its recovery plan.

Christie is expected to sign the legislation, passed by both houses Thursday, which is the result of a compromise between Senate President Stephen Sweeney (D., Gloucester) and Assembly Speaker Vincent Prieto (D., Hudson).

Christie, speaking on the 101.5 FM radio program Ask the Governor, said Wednesday evening that he would make a decision "very quickly" but would need to review any last-minute changes to the legislation.

"I'm glad this is done. This was very, very unnecessary," Sweeney told reporters, adding that he had offered similar terms to the city via a proposed memorandum of understanding last summer.

He added: "We need to move forward, and Atlantic City needs to get moving and start to fix their problems. It's a hard deadline."

Mayor Don Guardian, who visited the Statehouse to observe the voting sessions, said he planned to gather ideas from state officials, including the city's state-appointed fiscal monitor, to formulate the five-year plan.

"We have to work together, clearly," he said. "They could make it impossible for us."

In January, Christie and Sweeney had pushed for an immediate state takeover. Prieto resisted, saying that plan was unfair to public workers and would disenfranchise voters by disempowering local elected officials.

The speaker proposed an alternative bill, which failed to muster enough support to pass in his chamber. His proposal would have given the city two years to meet certain fiscal benchmarks before the state could fully intervene.

After months of infighting within the state Democratic Party - and warnings from Wall Street ratings agencies that inaction could force the city to restructure debts with bondholders - lawmakers introduced new legislation this week.

In addition to giving the city more time to craft its own financial plan, lawmakers voted to authorize a bridge loan and establish a payment-in-lieu-of-taxes (PILOT) system for the eight casinos in the city.

Under the PILOT system, the casinos would have to pay the city about $120 million collectively each year for a decade. That provision is intended to stabilize the city's property-tax base, which decreased from $20.5 billion in 2010 to $6.5 billion this year, according to the state.

Four casinos closed in 2014, accelerating the financial crisis.

Atlantic City is running a budget deficit of about $100 million and has lurched from month to month to pay its workers and cover bond payments. Its budget is $250 million, according to the state.

State Sen. Gerry Cardinale (R., Bergen), one of just five senators who voted against the main recovery bill, said the measure would enable "mismanagement" and "profligate spending."

The state says Atlantic City carries about $550 million in debt. Under the legislation, a tax on casinos' gross gaming revenue that currently sends money to an investment authority would be redirected to the city to help pay its debt service.

aseidman@phillynews.com

856-779-3846 @AndrewSeidman

Staff writer Maddie Hanna contributed to this article.