Deliverance in the Form of an Emergency Management Team for Atlantic City

Team elected to find viable solutions after gaming industry crisis flattens Atlantic City’s economy.

Governor of New Jersey, Chris Christie, has elected an emergency management team to save Atlantic City, citing that the gambling resort industry was in an “awful mess”. Team members will include Kevyn Orr. Orr was Detroit’s emergency manager for 1 and 1/2 years. In December 2014, the city recovered from bankruptcy.

Orr will work as special counsel to Kevin Lavin, a corporate turnaround specialist. Christie revealed the appointment during a summit in Atlantic City. Casino executives, state officials and union leaders were in attendance. It was the third time the Republican governor would bring together all three bodies to sort out the crisis at hand.

He said this would give some leverage to the city and its officials, including Mayor Don Guardian, a Republican, who took up post a little over a year ago. Christie was quoted as saying that Guardian “has inherited an awful mess. What we are doing is giving the mayor enhanced tools to be able to bring this to a successful resolution. This is not a move in any way to supplant the mayor’s role here in the city”.

Casino industry -built in the railway era destroyed in the automobile era

Thirty years ago casino gambling, became legal in Atlantic City thanks to the reviewed US gambling laws and the city saw classy casinos setting up home on its coast. However, ever since the legalization of more casinos, including in Pennsylvania, not so far away, the gambling industry has taken a nose dive.

In 2014, Four of Atlantic City’s twelve casinos closed last year, and three more are in the process of declaring bankruptcy. The shutdown of the casinos saw over 8,000 employees losing their jobs. Even, Revel, a fairly new casino to the city never managed to make a profit before it closed shop

An advisory commission revealed that Atlantic City’s property tax could lose more than a quarter of its property tax valuation in after the closing of the four casinos. Values could fall from $8 billion to $11.3 billion by 2016.

Lavin and Orr have sixty days to come up with a plan to restore Atlantic City’s financial status on “a long-term basis by any and all lawful means”. However, not everyone is in favor of plans proposed by one government official or the other.

Quibbles over whose plan is best for Atlantic City

The President of the New Jersey Police Benevolent Association, Patrick Colligan, voiced his disagreement about the appointment of the Atlantic City Emergency Management Team. He argued that the governor has selected a team in the hope of expecting spending to diminish just like that. He labels Christie’s move as being “both unnecessary and disturbing”.

• Spending and operations to be controlled by outside overseer
• Fear that emergency team elected to slash the city budget
• Appointment deemed as enhanced tool to find successful resolution.

He concurred that “Atlantic City does not need an emergency manager to guide it through this difficult period. They have been appointed simply to slash the city budget and to give the governor the hatchet men he needs to further ruin anyone who dares to make working for the public their career.”

Colligan is not the only who have disagreed to plans proposing to deliver Atlantic City from its financial woes. When state senate President Steve Sweeney proposed his PILOT plan last November, Chris Brown, Republican Assemblyman, disagreed.

The PILOT plan would see casinos having ‘cost certainty’ and at the same time rid them of “costly and unpredictable tax appeals” which would empty Atlantic City’s treasury of billions of dollars. Brown pointed out that, instead of creating a program that would allow casinos make payments in lieu of taxes, he proposed a tax freeze.

He explained that Atlantic County property owners should get the freeze and it would allow a tax reduction for some of the bigger land-based and mobile casinos in Atlantic City. Casinos could save at least $10 million a year. The Republican Party would, on the other hand, up county taxes on property owners, by $9 million each year.

To that proposal, state Sen. James Whelan, the co-sponsor of the Democratic plan, said that a property tax freeze over five year is “unconstitutional because it deprives people of the right to file tax appeals”. He defended the Democrats plan which would see casinos easily giving up appeal rights.

Another remedy put forward was the implementation of a more tenacious state monitor, than the current one in Atlantic City. The state overseer would help create a public-private development corporation.

This would draw business and residents to the area and diversify the economy. Currently, the casino investment taxes are injected into re-development projects to help lower Atlantic City’s municipal debts.

In any case, the ‘turn-around’ team is expected to do what a number of many bi-partisan attempts have failed to and that is to set Atlantic City on firm financial footing, but said they had failed.