While Atlantic City stumbled one day closer to closing its government as it runs out of money, state leaders moved even further apart Thursday in their escalating argument over how the state should intervene.

Assembly Speaker Vincent Prieto said state law gives Gov. Chris Christie powers that he has not used, and suggested the administration would be legally compelled to bail out the resort city if it defaults on a bond payment. The city says it will run out of money April 8.

But Christie said Prieto is wrong and insisted he won’t act unless a new state law is passed letting him renegotiate union contracts for the city’s public workers.

The solution is in the takeover bill. And I am not going to take responsibility for what happens in Atlantic City if I don’t have the authority to fix the problem.

“The speaker doesn’t know what he’s talking about,” Christie said. “I have authority now to block things, not to implement things. Let’s make it very clear: If Atlantic City’s finances go down the tubes, there’s only one person to blame and that’s Vincent Prieto.”

“The solution is in the takeover bill. And I am not going to take responsibility for what happens in Atlantic City if I don’t have the authority to fix the problem. And if the speaker thinks that the authority exists, it just shows that he has absolutely no experience in an executive branch position,” he said.

Prieto said a 1947 state law gives the state Department of Community Affairs and its Local Finance Board broad powers because the city has been under state supervision since 2010 and receives transitional aid for distressed municipalities.

That authority includes emergency loans in addition to the Local Finance Board liquidating the city’s debt and authorizing the city to lay off mangers.

“A bill is not needed for him to exercise his authority,” said Prieto, a Hudson County Democrat.

Prieto says the state is obliged to step in if a municipality defaults on a bond payment. That’s one of the reasons local governments in New Jersey generally have good bond ratings, he said.

“The state has the obligation, under Title 52, to come in. At the end of the day, the governor has to come in. It actually shows that if they default on a bond payment, the state has to take action. It is their duty,” Prieto said.

“The one playing the game of chicken is the governor. If there’s a default on any of the bonds, that actually has a ripple effect on all the credit ratings of all the municipalities in the state,” he said.

Believe me, if I had the authority to do what I wanted to do in Atlantic City right now, I would do it.

Not included on those lists of options Prieto cited is the ability to break union contracts, which Prieto calls a nonstarter and Christie calls a necessity. The state could review and approve new agreements while it has a city under supervision.

“Believe me, if I had the authority to do what I wanted to do in Atlantic City right now, I would do it. I don’t,” Christie said.

“There is only way to do this – to give broad authority to the state to renegotiate debt and to renegotiate public sector union contracts,” Christie said. “And if we’re not given authority to do that, then Atlantic City and the speaker can do it on his own.”

 

Prieto said the takeover bill should include benchmarks that Atlantic City must meet to maintain autonomy. If those aren’t met after 12 months or 18 months, then union contracts could possibly be broken, he said.

Collective bargaining, at this point in time, shouldn’t be on the table because they have done everything that was asked.

“Collective bargaining, at this point in time, shouldn’t be on the table because they have done everything that was asked. It could be, down the road, if we do benchmarks and they’re not met and it needs to be revisited, I’d be open to that,” Prieto said.

At a Newark news conference, Christie urged people concerned about the impact of an Atlantic City government closure to call Prieto's office and directed staffers to put the speaker's phone numbers on the Governor's Office website. The numbers were posted a short time later.

Atlantic City's finances went to pieces after the casino industry withered, taking with it two-thirds of the city's tax base. The city has made spending cuts and received large infusions of state aid, but Christie's says the city's finances can't be righted unless the state takes over operations with sweeping new powers, such as the authority to break contracts and sell city assets.

Adding to the intrigue is that Assembly Majority Leader Louis Greenwald, D-Camden, told Politico New Jersey the takeover bill, which has already been passed by the Senate, has the support needed to pass in the Assembly.

Prieto disagrees and said that a majority of Democrats and some Republicans are opposed: “I tell you right now, the votes are not there.”

Michael Symons has covered the Statehouse since 2000. He can be reached at michael.symons@townsquaremedia.com or @MichaelSymons_ on Twitter.