As Atlantic City faces running out of cash as early as this month, Senate President Steve Sweeney (D-3) has continued to push for a state takeover of the city’s finances. In addition to greater state oversight, the takeover would mandate that the city monetize the independent Municipal Utilities Authority, which controls the city’s water. With talks centering around a sale of the authority to the privately held New Jersey American Water, all sides will have to tread lightly to avoid stoking public fears of another Flint, MI or Newark, NJ.
Mayor Don Guardian told the Press of Atlantic City over the weekend that if the city council had not voted down a state-appointed emergency manager’s proposal to dissolve the authority and bring it in house last year, he believes the state would not be pursuing the takeover now. Local control of the authority could bring in between $4 million to $9 million every year.
The second pillar of the takeover plan would be top-down changes to collective bargaining agreements, a step that Sweeney has called a necessary evil against the objections of Guardian, the council and Assembly Speaker Vince Prieto (D-36). With bankruptcy the only alternative to monetizing the authority and altering those agreements, Sweeney said Monday that labor contracts will be on the chopping block regardless of whether the state or a bankruptcy judge makes the cuts.
“With a bankruptcy, there is no collective bargaining,” Sweeney said. “There is no civil service. They can fire whoever they want, they can privatize every job.”
Jim Walsh, New Jersey Director of the nonprofit advocacy group Food & Water Watch, called that position a feint. Citing the $165 million in subsidies that American Water received for moving its headquarters from Voorhees to Camden in 2015, Walsh called the takeover a bid for the water first and foremost.
But another potential solution lies closer to home. Sources in Atlantic County government said Wednesday that they are still prepared to take over the MUA if the county receives a larger share of revenues from casinos’ proposed PILOT payments (the fabled 13.5%). County Executive Dennis Levinson previously told PolitickerNJ that a request to take over the authority “better come with a check.”
Seton Hall political science professor Matthew Hale said that handing the keys over to the county could be a more sound decision than a sale, which he said would bring in only short-term gains. The county, which has not suffered the same string of credit downgrades as the city, would be well positioned to cut costs through its good credit alone.
“Atlantic County has lower borrowing rates,” Hale said. “If Atlantic County steps in and takes over the water and can use that as a way of borrowing, that actually seems to me like a solid policy strategy forward.”
“This is in their ultimate interest,” he added of the county option.