Atlantic City Anxious About Gaming in Northern NJ, State Takeover of Finances

Gambling resort argues that allowing gaming in north Jersey will only lead to more casino closures, layoffs and job losses in South Jersey

Sen. Jim Whelan (D-Atlantic) testifying against a proposal to expand casino gambling into northern New Jersey during the Senate Budget and Appropriations Committee meeting in Trenton.
Hit hard in recent years by an economic recession and a series of casino closings, Atlantic City is now facing what local officials consider to be two new problems: A proposed expansion of casino gambling into northern New Jersey and the possible state takeover of city finances.

And while state officials have tried to help the city in the wake of the recession and the casino closures, it’s now lawmakers in Trenton who are the ones driving both the push to expand casino gambling and the effort to control of the city’s troubled budget.

Taken together, the two measures will likely have a major influence on the future of the city and its government, but also on the southern New Jersey region as a whole, which is heavily reliant on the casino industry for jobs. Also at stake, according to local officials, are the rights of city residents and their leaders to determine their own way out of the ongoing economic calamity. But offering them some hope is the fact that there are still several more steps in the legislative process that have to play out before either initiative comes close to being enacted.

Both proposals advanced in the State House this week, the first of a new legislative session that began on Tuesday. A Senate committee voted yesterday to approve the latest version of the amendment seeking to expand casino gambling into north Jersey, and a bipartisan group of lawmakers formally introduced earlier in the week the bill calling for the state takeover of city finances.

Several lawmakers who represent Atlantic City and officials from the local business community spoke out against the proposed constitutional amendment during the Senate hearing yesterday. To get the issue on the ballot this fall, it will take approval from 3/5 of the Legislature.

The amendment was the product of a deal announced on Monday by Gov. Chris Christie, a second-term Republican, and Assembly Speaker Vince Prieto and Senate President Stephen Sweeney, who are both Democrats.

The three leaders have billed the expansion of casino gambling as an overall win for the state, pointing to a net gain of jobs and gambling revenue that’s currently being lost to casinos in neighboring states.

And they’ve also argued that the current version of the constitutional amendment is a win for Atlantic City because it guarantees some of the revenue generated by the north Jersey casinos will be reinvested in the seaside resort.

But Assemblyman Chris Brown (R-Atlantic) pointed yesterday to studies that indicate casinos in north Jersey would siphon away many customers who currently drive to Atlantic City to gamble. As much as 40 percent of Atlantic City’s current customer base comes from the state’s northern region, Brown said. That competition from within the state will force more casinos to shut down on top of the four the resort has watched close in recent years, he said.

“I can tell you that the people in Atlantic County are scared,” Brown said. “They’re unsure of their future.”

Sen. Jim Whelan (D-Atlantic) said the expansion would come even as other states in the region have also opened casinos to compete with Atlantic City’s after seeing the type of revenues the resort once generated for New Jersey’s coffers.

“Atlantic City is a victim of our own success,” Whelan said.

In all, eight new casinos are expected to open in the region by the end of 2018, according to a report released on Wednesday by Moody’s Investors Service. The report said any expansion of casino gambling in north Jersey is “particularly bad news for the already struggling Atlantic City gaming market.”

That report followed new casino gaming revenue figures released by the state that indicated a 6.5 percent decline in revenues during 2015, which followed a nearly 9 percent drop the year before. But four casinos that have added online gambling as an option under a state law passed in 2013 did better last year than in 2014. And the average casino revenues of surviving Atlantic City casinos were up 3.1 percent over 2014, for a total of $2.56 billion.

Debra DiLorenzo, president and chief executive of the Chamber of Commerce of Southern New Jersey, said even if new casinos in north Jersey create new jobs, South Jersey can ill afford to lose the thousands of jobs that more casino closures in Atlantic City would bring on.

“Moving gamblers from Atlantic City to north Jersey benefits only north Jersey at great expense to South Jersey,” DiLorenzo said.

And she added that diverting some of the tax revenue from the casinos in north Jersey to Atlantic City, though well-intentioned, would do “absolutely nothing to combat the regional negative impact.”

[related]City officials, meanwhile, are also pushing back just as hard against the legislation proposed by Sweeney (D-Gloucester), and Sens. Paul Sarlo (D-Bergen) and Kevin O’Toole (R-Essex), that calls for the state to take over city finances for a 15-year term. For that to happen, a majority of lawmakers in the Assembly and Senate will have to endorse the takeover legislation, along with Christie.

Atlantic City is already subject to close state monitoring, which began in 2010. Christie also appointed an emergency manager to provide more oversight about a year ago. And legislation sent to Christie’s desk earlier this week also seeks to improve state finances by establishing a payment-in-lieu of taxes program and plans to provide the city additional budget and debt relief.

“We’re working with the state government and we’re following the recommendations of both the emergency manager and the monitor,” said Atlantic City Mayor Don Guardian during a news conference held in the city on Wednesday.

“We’re working to bring this city back,” Guardian said.

But the lawmakers said given the state’s significant investment in the city over the years it only makes sense for them to try to step up their oversight even more as the state still struggles to balance its budget. Moody’s, in another recent report, said the city is likely to have a budget hole totaling $34 million next year.

“We want to give the taxpayers of New Jersey an active voice in how public funds are spent in Atlantic City,” said Sarlo, who chairs the Senate Budget and Appropriations Committee. “We have to bring responsible financial management and practices to Atlantic City.”

“This is the pathway to create an efficient, accountable, and transparent Atlantic City government,” O’Toole said.

A takeover, however, would deprive local leaders and residents a role in determining their fate, said Atlantic City Council President Marty Small.

“It takes our sovereign right to govern our own city away from not only the 10 elected officials, my fellow council colleagues’ and the mayor, but the city as well,” Small said.

He also echoed Guardian’s comments about the city making progress while working with the special state-oversight programs that have already put in place in response to the city’s plummeting economy. But the bottom line, he said, is tax ratables in Atlantic City have fallen off a cliff.

“There’s no municipality in the United States of America that’s had to deal with the issues we’ve dealt with,” Small said. “We’ve done everything that the state has asked us to do.”