The politics that impede a state rescue of Atlantic City

TRENTON - Atlantic City ran out of cash Friday after delivering paychecks to its public employees and won't have any more money until second-quarter tax receipts flow in May 2.

Credit agencies have repeatedly downgraded the city's general obligation bonds and have warned investors that the resort town may default on its debt payments this year, or even go bankrupt.

So why haven't Gov. Christie and the state's legislative leaders enacted a plan to stave off a financial disaster that could have ripple effects on other distressed municipalities?

This story of government dysfunction reflects new political dynamics that are reshaping Trenton ahead of the next gubernatorial election.

And it is particularly nasty, even by New Jersey standards. "The level of acrimony and personal animosity is just astonishing to me," said Carl Golden, a former press secretary for Republican Govs. Christie Todd Whitman and Thomas H. Kean.

He noted that Atlantic City Mayor Don Guardian has described Christie's plan as a "fascist dictatorship," and the governor has called the mayor a "liar."

"I haven't seen anything like this," he said. "Even the worst uproar in 1990 over the Florio tax increases I don't think reached this level."

Christie is partnering with Senate President Stephen Sweeney and other South Jersey Democrats, as he did in 2011, when they overhauled the pension and health benefit systems for New Jersey's public employees, over considerable opposition from labor unions.

This time, as the Republican governor and Sweeney (D., Gloucester) push to take over Atlantic City's government, they lack a key ally in the Assembly.

In his first term, Christie developed a relationship with Joe DiVincenzo, the Essex County executive and Democratic power broker. DiVincenzo's allies in the legislature - most crucially, Speaker Sheila Oliver - helped deliver the votes for the pension and benefit legislation, which a majority of Democrats opposed.

Christie and Sweeney are having less success working with Speaker Vincent Prieto (D., Hudson), who has sought to make his chamber more relevant since assuming leadership in January 2014.

Christie, now a failed presidential candidate and lame-duck governor, has little, if any, sway with Prieto. The speaker is an ally of, and shares a home county with, Jersey City Mayor Steve Fulop, who is expected to seek the Democratic gubernatorial nomination in 2017.

Sweeney is also likely to run for governor. Sweeney's support of the takeover legislation - which would grant the state the authority to modify or terminate Atlantic City's labor contracts, among numerous other powers - could endanger his standing among public-sector unions, with whom he has tried to mend ties since the 2011 pension fight.

In a letter to colleagues last week, Prieto seemed to remind organized labor of Sweeney's past transgressions. The senator, Prieto wrote, had "again enabled" Christie by passing takeover legislation that "violates progressive principles by trampling collective bargaining and allowing unfair labor practices."

Union support, along with endorsements from county party leaders, is seen as crucial in the 2017 Democratic primary.

As in the 2011 pension/benefit fight, South Jersey Democrats are supporting Christie in the Atlantic City debate. With broad bipartisan support, the Senate last month passed the takeover bill and legislation that would establish a payment-in-lieu-of-taxes system for the city's eight casinos.

But Prieto has refused to hold a vote on the Christie-Sweeney plan, and on Thursday, an Assembly panel advanced an alternative bill, sponsored by Prieto, that would largely maintain city autonomy unless it failed to meet certain fiscal benchmarks within two years.

Christie says he would veto Prieto's bill.

Many state and local labor unions, including the AFL-CIO and Police Benevolent Association, as well as those representing firefighters and transit workers, filled a committee hearing to lend their support to Prieto.

"We want to be respectful of brother Sweeney," Charles Wowkanech, president of the state AFL-CIO, said in an interview Thursday. "Steve is our friend. He's our brother."

Wowkanech noted that Sweeney, a union ironworker by trade, had taken a leading role on pro-labor legislation to increase the state's minimum wage, mandate earned sick leave, and amend the constitution to require the state to make bigger contributions to the pension system for public employees.

"There's a bigger picture here," Wowkanech said. "We're not at war."

Equally telling was who didn't speak at the hearing. The New Jersey Education Association, the most powerful public-sector union in the state, has not taken a position on the takeover debate, spokesman Steve Baker said.

Baker said the union's focus was ensuring that Atlantic City public schools get adequate funding; the Christie administration sued the city for allegedly withholding school funds so it could meet its payroll. A state judge Friday denied the administration's request to freeze the city's assets until it makes its next school payment.

The city's main casino union, which represents 10,000 workers, supports the takeover.

William Mullen, president of the state Building and Construction Trades Council, has called on Prieto to post the takeover bill for a vote. His members stand to gain work if voters in November approve a referendum authorizing casino expansion to North Jersey; supporters worry the proposal will fail unless the state rescues Atlantic City.

Further, Christie has vowed to campaign against the amendment if the Assembly doesn't pass the takeover legislation.

The division among organized labor "makes it more likely that Sweeney and Christie" prevail in the Atlantic City debate "because there's not a completely united front," said Matthew Hale, a political scientist at Seton Hall University.

However, Christie appears to be losing influence among legislative Republicans. Two Republicans voted in favor of the Prieto bill Thursday. A few years ago, Christie "would've eaten them for lunch," Hale said.

After Christie began campaigning for Donald Trump, some New Jersey Republicans openly questioned whether the governor should resign.

Trenton observers aren't sure what will happen next. "Both sides . . . are just so locked in in their respective positions, that any move now toward a compromise is going to be seen as a defeat for the person who compromises," Golden said. "And that's not particularly helpful either."

aseidman@phillynews.com

856-779-3846 @AndrewSeidman