Protecting A City’s Future

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eBlog, 5/27/16

In this morning’s eBlog, we consider the vital role a city has to try to protect its most vulnerable citizens: its children—noting the essential role public safety plays in municipal trust and revenues—ergo, the continued high murder rate, especially of children, in the Motor City continues to present severe governance challenges to the city’s ongoing fiscal recovery. We look at yesterday’s action in Trenton, New Jersey, where—at long last—the legislature has adopted and sent to Gov. Chris Christie legislation to avert Atlantic City’s insolvency next month—albeit we await how the Governor will react—and the next steps as the city enters its most critical months of the year.

Protecting a City’s Children. In our report on Detroit, we had noted that, according to the census, 36 percent of its citizens were below the poverty level, and, the previous year, Detroit had “reported the highest violent crime rate for any U.S. city with a population over 200,000.” Writer Billy Hamilton had called the city “either the ghost of a lost time and place in America, or a resource of enormous potential.” Although Detroit’s crime statistics, like its finances, appear to be headed in the right direction, Forbes last fall noted that the city once again had topped Forbes’ list of America’s Most Dangerous Cities, citing 298 murders and intentional homicides in Detroit in 2014. Even though that was the lowest number in 47 years, according to statistics compiled by the Federal Bureau of Investigation and the Detroit Police Department, it still worked out to a murder rate of 43.5 per 100,000 residents, or approximately ten times the national average. The city’s overall rate of violent crime, including assault and robbery, was 1,989 per 100,000 residents, down from over 2,000 in 2013, but still more than five times the national average, which also has been falling for years. Now Detroit Mayor Mike Duggan, who was elected in 2013 and reclaimed full control over the city’s operations when it emerged from bankruptcy, has been going high-tech, urging businesses to install video cameras to give police a better picture of violent crimes and who’s committing them, noting: “I’m just so tired of every time you get this blurry image where you can’t tell who the person is.” Now, as 2016 nears the halfway point, Detroit’s list of child casualties grows, a problem underscored by two cases this week involving toddlers close to their third birthdays. It brings to eight the number of youths injured or killed by gunfire in Detroit in the past two months. Wayne County Prosecutor Kym Worthy, in announcing charges against two Wednesday, urged gun owners to secure their firearms and keep them unloaded around children. Ms. Worthy said the shootings of youth when they find weapons are “totally…absolutely preventable” and called for more criminal penalties where “negligible” gun ownership is at fault; she called for safety classes and local hospital officials to reach out to pediatricians about programs to educate parents about gun ownership. The flurry of cases involving children, especially, has residents and police upset and angry: Assistant Police Chief Steve Dolunt urged a change from the city’s violent culture, warning: “You gotta have a license to drive a car, but there’s no one to teach you to be a parent,” during a news conference yesterday, adding: “This (violence) is learned behavior.” A 2014 Detroit News investigation found nearly 500 Detroit children have died in homicides since 2000, and now the Detroit News staff writers James Dickson, Candice Williams, Oralandar Brand-Williams, and Mark Hicks note it appears to be continuing unabated. There were 298 murders and intentional homicides in Detroit in 2014, the lowest number in 47 years, according to statistics compiled by the Federal Bureau of Investigation and the Detroit Police Department—grim statistics that work out to a murder rate of 43.5 per 100,000 residents, which is still almost 10 times the national average. The city’s overall rate of violent crime, including assault and robbery, was 1,989 per 100,000 residents, down from over 2,000 in 2013, but still more than five times the national average, which also has been falling for years. Thus, Mayor Mike Duggan, who was elected in 2013 and reclaimed full control over the city’s operations when it emerged from municipal bankruptcy is laser focused on utilizing high-tech, urging city businesses to install video cameras to give police a better picture of violent crimes and who’s committing them. As the Mayor notes: “I’m just so tired of every time you get this blurry image where you can’t tell who the person is.” Mayor Duggan earlier this month announced plans for eight gas stations to install better lighting, high-resolution cameras, and license plate cameras with live feeds to Detroit police.

Life Buoy or Jewel in the Crown? The New Jersey legislature late yesterday passed and sent to Gov. Chris Christie legislation to keep Atlantic City from insolvency: the Assembly and Senate approved the measures by wide margins; Gov. Chris Christie, who earlier supported legislation allowing for an immediate state takeover of the city’s finances, has said the bill gives him the authority he needs, although he stopped short of saying whether he would sign the bill. For his part, Atlantic City Mayor Don Guardian used a Trumpian expression, calling the legislature’s action “huge: We want people to know the shore is open for business.” The bill, if signed into law, would give the city five months to draw up plans to balance its books over the next five years. New Jersey Assembly Speaker Vincent Prieto described the compromise as a signal improvement over an earlier Senate- and Christie-backed bill which would have imposed an immediate state takeover, although state Senate President Steve Sweeney criticized the delay and said he had sought unsuccessfully last summer to encourage the city to reorganize its finances, calling the long delay “very, very unnecessary,” especially since, as he noted: “A very similar offer was made last July, and it was rejected.” Under the legislation, Atlantic City will receive temporary loans of $30 million for the remainder of this year; $30 million to be applied to leftover FY2015 debt, and another $15 million for FY2017. The city also would be able to receive at least $120 million each year from casinos under a payment-in-lieu of taxes bill that would last for 10 years—and casinos would not be allowed to opt out of the PILOT plan, even if state voters authorize casinos in northern New Jersey. The compromise includes provisions to offer early retirement to the city’s workers and retain its collective bargaining rights. Finally, the package retains the Senate provisions to allow a state takeover of Atlantic City’s finances and major decision-making powers in just 150 days, including the right to unilaterally break union contracts, but only after its Community Affairs department determines that the plan Atlantic City comes up with is unworkable. Notably, the city would be barred from appealing such a determination to the courts before the state could take over. This means the city will have just five months in which to plug its more than $80 million budget deficit and prepare a five-year financial plan—or risk state intervention. Speaker Vincent Prieto described the final action as “something that gives them the tools to be able to be successful…This is something that now the administration of Atlantic City can roll up their sleeves with their workforce and I think we’re giving them an opportunity to again be the jewel of New Jersey.”

Both chambers of the legislature also passed a companion bill enabling Atlantic City’s eight remaining casinos to make fixed payments in lieu of property taxes (PILOT) for 10 years. The individual PILOT amount for each casino would be based on its share of total gambling revenue. The additional payments would be used to pay down Atlantic City’s debt through the reallocation of the receipts collected by the Casino Redevelopment Authority from the casino investment alternative tax. The bill differs from a previous version Gov. Christie vetoed last November, which would have directed the city’s casinos to contribute $30 million collectively to the city in 2016. Under the version agreed to yesterday, the program would not commence until next year. To date, all the city’s casinos have made their 2016 tax payments, except the Borgata, which is in litigation with the city over $170 million in tax refunds owed to the casino-hotel. Senate President Sweeney said the city’s recovery plan, at his insistence, could also authorize the use of early retirement programs for city workers to minimize the impact of workforce cuts—and that Atlantic City would be required to make full obligated payments to schools and Atlantic County, noting: “This plan gives Atlantic City the opportunity to do the job itself to prevent bankruptcy and make desperately-needed financial reforms…Along with the reforms, this plan will provide financial resources and the ability to access the financial markets, which is critically important for long-term fiscal health.”

The ever prescient Marc Pfeiffer, the Assistant Director of Rutgers University’s Bloustein Local Government Research Center, said that the new agreement should give Atlantic City officials sufficient resources to balance the city’s budget with revenue from the rescue package and the PILOT bill, noting the city will also likely seek additional savings from labor contract negotiations, shared services, and selling off city assets such as its former municipal airport, Bader Field, adding, however: “During these next five months the city has some substantial challenges.”

For his part, Gov. Christie said Wednesday night during a radio show that he will quickly decide whether to sign, noting: “All the authority I would need is in there.”

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