TRENTON - Atlantic City inched closer to bankruptcy Thursday as lawmakers spent hours discussing the Assembly speaker's proposed rescue legislation, only to cancel a scheduled voting session, and Gov. Christie said he would rather let the resort town go bankrupt than write "more checks."
"We do not have time to dawdle here," Christie said at a Statehouse news conference, adding that state officials had told him the city would run out of money in 10 days. That would not automatically trigger bankruptcy, but the city would face severe cash-flow problems.
The bizarre day of dueling news conferences, hours of debate without substantive action, and mixed messages about what happens next was the result of a deepening division between North and South Jersey Democrats, an ongoing shadow race for governor, and bruised egos.
Initially, Speaker Vincent Prieto (D., Hudson) said the Assembly would vote on his bill, which would establish a five-member committee of three state and two city officials, charged with developing a five-year financial plan.
A special master appointed by the chief justice of the state Supreme Court would determine whether the city had met the fiscal benchmarks set by the committee.
Prieto told reporters his bill had the support in the 80-member chamber needed to pass the legislation, but three North Jersey Democrats who he said favored the bill were absent. Sources told the Inquirer that the lawmakers were absent because they did not support the bill.
The measure had no support from South Jersey legislators.
Senate President Stephen Sweeney (D., Gloucester) called Thursday a "day of proof" that affirmed what he had long predicted: Prieto's bill would fail.
Christie, who had vowed to veto Prieto's bill anyway, joined in, describing the speaker's efforts as a "vanity exercise."
"Shocker," Prieto said, responding to the criticism. He said he had called for a vote "to get us a seat at the table to negotiate."
"I have not gotten a seat at the table," he said.
Given Thursday's outcome, Sweeney said, the Assembly should vote on his version of the legislation, which is also sponsored by Assembly Majority Leader Louis D. Greenwald (D., Camden).
That bill, which has passed the Senate and is backed by Christie, would allow the state to terminate the city's labor contracts, restructure debts, sell assets, and dissolve agencies, among other provisions. It would also offer early-retirement incentives. The state would have control of the city government for five years.
Prieto says that measure would be unfair to public employees and lacks sufficient support to pass his house. Instead, he, Greenwald, and other Assembly lawmakers will meet in Trenton on Friday to try to hash out a deal acceptable to the Senate and that Christie would sign. He said he would hold a voting session Wednesday.
The latest events followed a sharp exchange between a Prieto ally, Jersey City Mayor Steve Fulop, and a Sweeney ally, George E. Norcross III, the insurance executive and Democratic power broker, over Atlantic City. Fulop and Sweeney are widely considered potential rivals for the Democratic Party's gubernatorial nomination in 2017.
Sweeney and Prieto support a payment-in-lieu-of-taxes system for the city's eight casinos to help stabilize its property tax base. The PILOT provision would also give the city millions in state aid. Christie has twice vetoed PILOT legislation, but has said he would accept it if the takeover goes through.
Greenwald and Sweeney have previously proposed amending their bill to give the city until the end of the summer to adopt a "legally binding" plan to sustainably reduce per capita spending by nearly half. Prieto said that was "unachievable," but he seemed amenable to a plan that would require the city to meet benchmarks within a shorter time than his two-year proposal.
Yet he maintained that the city's labor agreements with public employees could not be on the chopping block "up front." Christie has said those contracts need to be modified if bondholders and casinos are expected to take cuts on debt the city owes.
"Any conversation of anything like the bill that the speaker put up has to now be over," Christie said. "And we need a bill with the kind of broad authority that the Sweeney bill has, with the tools that it gives to the executive branch."
Even "extraordinary support from the state government" is unlikely to prevent "a default or debt restructuring that would impair bondholders," Standard & Poor's said Wednesday in announcing that it was downgrading the rating on the city's general obligation bonds.
The city made an interest payment on its debt this week. Its next payment is due June 1. Mayor Don Guardian's office said the city would pay the $7 million it owes to 900 workers on Friday as part of a deferred-wage plan.
Assemblywoman Holly Schepisi (R., Bergen) pointed to the S&P report and said lawmakers needed to determine whether the city is "salvageable at this point." If it is not, the state should "rip the Band-Aid off" and approve a filing for bankruptcy protection.
The city is running a deficit of $100 million and has about $550 million in debt, according to the state.
A state fiscal monitor has overseen the city's finances since 2010 - approving budgets - but proponents of a takeover say the state has not been able to force spending cuts or other cost-saving measures.
"Bankruptcy is preferable to continuing to kicking the can down the road, yes - not preferred - but preferable to the alternative of just writing more checks on the backs of the people of the state of New Jersey," Christie said.
Prieto said he would work to get a compromise bill passed.
Legislation "still has to go through my house," he said. "Without us, they can't get anything. Then, guess what, without that, then potentially you have bankruptcy or something, then it's on the governor."