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Sweeney fears Atlantic City bankruptcy after meeting with Prieto

Friday, April 22, 2016   (0 Comments)
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NJ.com 04/20/16

New Jersey's top two state lawmakers met privately Wednesday to discuss their competing plans to help save financially imperiled Atlantic City, but they left the Statehouse with no deal — and wildly different outlooks.  Shortly after his hour-long sit-down with state Assembly Speaker Vincent Prieto ended, state Senate President Stephen Sweeney said no progress was made and stressed that he's worried the Jersey Shore gambling resort is headed toward insolvency. "I think we're going to face bankruptcy," Sweeney (D-Gloucester) told NJ Advance Media. "I'm very concerned what's going to happen to other communities because of this." Experts say if Atlantic City — which is weeks from running out of money — defaults on its debt or goes bankrupt, the credit ratings of other municipalities across New Jersey would tumble. Prieto (D-Hudson) was more optimistic, saying the meeting was a "good start." "We're talking," he said. "Hopefully, we can get somewhere."

Atlantic City, socked by the closure of four casinos in recent years, has about a $100 million budget deficit and is more than $550 million in debt. Sweeney has been pushing a plan backed by Gov. Chris Christie that includes an aid package and a bill that would allow a five-year takeover of many city functions. But while the state Senate approved the takeover, Prieto has introduced his own rescue bill that would give the city two years to address its issues before a takeover is triggered. Last week, Sweeney offered a compromise plan, which would give Atlantic 130 days to find solutions before the takeover happens. Prieto dismissed it, saying the city could never make enough cuts in that time and that the proposal would still not protect union contracts. 

Sweeney said Wednesday that Prieto "doesn't feel Atlantic City can go bankrupt" because he believes the state is required under law to step in. But, the Senate president noted, "nowhere does it say the state has to write a check." "If Atlantic goes into bankruptcy, the only person you can point a book at is the speaker," Sweeney added. Hester said he has "no idea what (Sweeney is) talking about," except that he may be referring to a recent opinion by the nonpartisan state Office of Legislative Services. The opinion notes that under state law, when a municipality defaults for more than 60 days on outstanding notes or bonds, the court "shall require the state to exercise its powers and duties to stave off bankruptcy." But a separate OLS opinion from earlier this month says that while the state has "significant statutory authority" to assist Atlantic City, there is no legal obligation to exercise that authority."


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