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A Blueprint for Compromise: Fixing Atlantic City

Friday, April 22, 2016   (0 Comments)
Share | 04/19/2016

The fate of the City of Atlantic City is hanging in the ballast, and it seems that political leaders are edging ever so slightly at recognizing that no-one’s interest is served by digging in one’s heels. In moving forward, it appears that there is room for compromise, and both state Senate President Stephen Sweeney and state Assembly Speaker Vincent Prieto can be the heroes that save Atlantic City with a little give and take. Gov. Chris Christie can also come out of an Atlantic City compromise with a political win, and perhaps even a legacy to boast of. One key issue that state leaders need to consider: under the Sweeney’s proposed compromise measure, the state would decide on whether to takeover based on the condition that the city to create a budget in which per capita spending does not exceed $3,500 per resident.

If the city fails, then the original takeover plan would take effect. The problem with that plan is that it does not recognize the unique situation of a resort town that is home to 39,000 residents, but on any given day could find an addition 50,000 people on its beaches, and another 50,000 in its casinos, restaurants and shops. And so state officials are equating Atlantic City’s service burden to places like Winslow, and Monroe, Teaneck, and Marlboro. When was the last time 130,000 people crammed into Winslow on a summer Saturday? Or 50,000 attended a concert in Monroe? And the people that come to Atlantic City – the “day residents” require city services: police protection, life guards, ambulances, infrastructure, toilets, maintenance and so on. And so the state needs to recognize that while there are serious issues with Atlantic City’s finances, gauging the city’s spending by comparing to places like Patterson or Jersey City is disingenuous.

A simple example: on average, EMS in Atlantic City makes about 20,000 runs a year. Given its per capita population, half of the city’s residents would be calling an ambulance each year. Now they like to party in Atlantic City, but intuitively, we know this doesn’t make sense, and so Atlantic City should not be held to the same standard as other municipalities with similar numbers of permanent residents. And so the state must think more broadly about how to compel Atlantic City to get its financial house in order – a ten percent reduction in spending, or some other formula.

State leaders must recognize also that there is not a lack of political will to solve this problem. Mayor Don Guardian, elected in 2014, has attempted to balance the protection of his constituents’ interests with the harsh fiscal realities that the city faces. And he has does so in a context of constraint: controversial pensions for lifeguards? State mandated. Room Tax? State controlled. Luxury Tax? State controlled. Parking Tax? State Controlled. The state collected $60 million in taxes and fees from Atlantic City visitors, and precludes the city from increasing any of these taxes if it chooses. The city needs to be freed from many of the constraints that are confining both its ability to decrease expenditures and increase revenue if the state wants it to become solvent.

The emergency nature of the city’s fiscal situation has once again meant that there is government by crisis. But this also means that while attempting to figure out a solution, the city and the state must step back and take a look at what the city’s future should look like for a post-gaming centered Atlantic City. And unlike previous examinations, this one must include key stakeholders, including citizens, elected officials, business leaders, tourism experts, and state economic development officers.

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