Gov. Christie acts by fiat in AC with disturbing results

Gov. Christie in order to get his way can act with broad bipartisan/popular support (Opioid Antidote and Overdose Prevention Act which was overwhelmingly approved by the legislature), obtain narrow bi-partisan support (half-baked Dreamers Act), arrange a pre-negotiated agreement with legislative leadership (tenure for our Chief Justice in exchange for a Republican Supreme court judge), remove line items costs from the legislature’s budget bill (he does so every year), veto bills (his vetoes have never been over-ridden), go to court (he failed to quash marriage equality and Fair Share housing claims, but succeeded in reducing the pension payment last year), and with the vast power of his office he can act by fiat.

In the case of Atlantic City he chose to act by fiat. In his press release he provided little reason for imposing an Emergency Manager and no clear vision regarding the anticipated outcome. Rather than offer more guidance and additional financial assistance, he turned the matter over to a hired manager. He can now continue his quest for the presidency paying little attention to AC problems. In his Executive Order he rehashed some of the already well-known financial issues. More importantly he hinted at approaches which deeply disturbed credit agencies and will bring concerns from unions, creditors, and bondholders with a potential negative state-wide impact.

In his typically impatient, “I am the Boss” approach, he said in his press release, “We haven’t gotten there, and I can’t wait any longer, and so we need to take more aggressive action and that’s the action that I’m taking today. We have problems we have to fix.” He provided no explanation for the “need” nor for the “fix.” He went on to say, “This is not to declare that what we’ve done before has been a failure.” In fact after five years in office he has failed spectacularly with insufficient and unsuccessful approaches, not the least of which was his investment in Revel. The city and county are now in tatters.  

In his Executive Order he lists broad financial/economic problems. He goes on to authorize and direct the Emergency Manager to:

“Prepare and recommend, within 60 days of appointment, a plan … including the restructuring of municipal operations and the adjustment of the debts of Atlantic City and to negotiate with parties affected by the recommended plan for an adjustment of Atlantic City’s debts and the restructuring of its municipal operations and, in his discretion, to recommend modifications of the plan as a result of such negotiations.”

In addition to city staff and program cuts (with no mention of further state financial assistance) the above statement hints at bankruptcy, reduction of union benefits, lower payments to vendor creditors, and a cut in repayment to bondholders.

It is no surprise that Standard and Poor’s lowered its general obligation bonds rating on Atlantic City four notches and placed it on CreditWatch, and the other large rating agency, Moody’s, a day earlier cut AC bonds to junk status.

S&P explained, “the governor’s action could expose Atlantic City to adverse business and financial conditions that could lead to an inability to meet financial commitments on its obligations.” S& P went on to say, “the choice of an emergency manager and special adviser…  increases our concern that the plan created will include scenarios that lead to non-payment of the city’s bonded debt, as could happen in a debt restructuring or a bankruptcy.” Moody’s expressed its concern that Christie’s actions “may hurt not only Atlantic City’s credit worthiness but all of the state’s financially strapped cities.”

So after years of inattention with weak and ineffectual action, our governor by fiat has taken sudden draconian action. What he has done is well within conservative Republican tenants of not spending money, reducing government involvement, and weakening unions. It also creates a vicious cycle that places Atlantic City, the county, and other NJ urban cities at high risk of adverse business and financial conditions, which would increase interest rates, and could precipitate bankruptcies. He does this all in the name of “good” Republican government and without him having to spend much time on tedious details. However most likely his legacy and presidential hopes will be further impaired while AC and other areas in the state will suffer the future consequences.  

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