The name-calling in New Jersey over Atlantic City makes the Cuomo-de Blasio feud look like a hot-and-heavy love affair.
In recent weeks, Mayor Don Guardian ripped backers of a bailout bill, including Gov. Chris Christie and Senate President Stephen Sweeney, as “fascists” and back-stabbers.
Another AC pol blasted the plan’s “hypocrisy,” while the local NAACP chapter head said it’s all “about racism and greed.”
Sweeney fired back, calling the comments “childish.” A Christie aide blasted Atlantic City’s “irresponsibly.”
AC locals are furious because the bill would give Trenton power over the city’s finances, including the right to tear up contracts with unions, lay off workers, refinance debt and sell city assets.
Don’t laugh too hard, New Yorkers: The crisis has valuable lessons for this side of the river.
Starting with the source of Atlantic City’s troubles: too heavy a reliance on now-declining casino gambling.
State after state has jumped on the “gaming” bandwagon. Thanks to that growing competition, revenue for AC casinos has dropped by half, from $5.2 billion in 2006 to $2.6 billion last year. The plunge forced four of the city’s 12 casinos to close in 2014, costing thousands of workers their jobs.
AC’s tax take also took a huge hit, but spending failed to shrink in kind. Sweeney says the city now spends $3 for every dollar it collects.
Bottom line: Atlantic City is staring at a $240 million mountain of debt. And its credit rating is CCC- (a k a, lend-at-your-own-risk), so it can’t borrow easily. Fiscal doomsday may be just weeks away.
But for all the locals’ complaints about the bailout bill, it lets AC avoid bankruptcy and provides state help while it restructures its finances.
And bankruptcy would mean even more misery than the bailout bill.
The lessons for New York are as critical as they are obvious:
- Don’t pretend there’s magic money to be had from casino revenues. We’re looking at you, Gov. Cuomo.
The gov pushed through a constitutional amendment in 2013 to allow seven new casinos in New York. In December, a state board OK’d licenses for the first three.
Cuomo promises this will pump up the ailing upstate economy and fuel tax revenues.
Two words, Gov: Atlantic City.
- Public-worker unions, too, should take note: No contract is safe from economic forces. If the deals you strike are unaffordable, you’ll pay the price eventually. (Detroit’s bankruptcy even led to the slashing of workers’ pensions.)
- Big-spending pols (paging Mayor de Blasio) can also learn: Fat budgets that depend on high taxes will set up you and your constituents for trouble if the economy sours and tax revenues take a dive.
New York City had its own brush with bankruptcy in the ’70s. That should’ve been enough for the city — and the state.
Question is: Will it be?