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Tuesday, July 20, 2010

Christie Nationalizes Atlantic City

Breaking: Governor Chris Christie will propose a massive state takeover of the casino district and various entertainment facilities in what amounts to a massive power grab by the State. Despite a $10 billion budget deficit this year and next, Christie on Wednesday will propose that the State of New Jersey take over the casino district of Atlantic City and turn it into a new city under direct state control, creating a new state authority to govern it, and that the state (through the New Jersey Sports and Exposition Authority) sell off the Meadowlands Racetrack and Izod Center.

What this means is the following:  While essential services (e.g., teachers) are cut, the administrator level public officials -- the root cause of the waste, fraud and abuse -- remain employed and keep getting their salaries and the State will create and fund a new bureaucracy to protect an arguably obsolete gaming industry which caters largely to out-of-state customers.

On Wednesday, July 22nd Christie will formally announce his plan.  I expect to access the actual plan and link to it once I get it.  Stay tuned. - E.D.

Initial thoughts: How does a state running a $10 billion deficit have the money -- or the expertise - to take over and operate a large municipal district, create a new town and a new state authority to run it? How do we cut services while creating a new bureaucracy? In fact, why is the government subsidizing or supporting gambling at all?

The Meadowlands Racetrack has been losing money consistently, but why sell it when its value may be lowest? This is the reverse of buy low sell high. Wouldn't its value only increase once football season comes and the Xanadu complex finally (one day) opens?

I have questions in the wake of the privatization task force report, and the Reform Jersey Now contribution solicitations (as reported by the Record's Charles Stile, see http://www.northjersey.com/ and look for his July 20th column) which openly listed the various services and industries which would be privatized (so contributors could figure out if they could get a piece of the privatization bounty).

There is a strong suspicion that Christie is pursuing his concept of "privatization" -- or more accurately, creating a government-sponsored oligopoly or monopoly -- to help various friends and supporters profit on the public dime. In turn, this support is expected to facilitate lots of legal issue advocacy ads to return the support to Christie -- whom I predict is already covertly running for President in 2012.

Question: If Venezuela despot Hugo Chavez seized that country's oil refineries tomorrow, we would call it "nationalization," denounce him and watch as foreign capital fled the country in horror.

If Christie wishes to nationalize the gaming industry, what other industry in the state is safe? This smacks of the same abuse we saw with eminent domain, where public authorities just declared in a self-serving way that properties were blighted and seized them in order to rehabilitate them, paying what they determined to be fair market value to the hapless owners, of course to the benefit of their new, connected owners.

All of this smacks of the conversion of public funds into private profit. Isn't this how Joe Ferriero and other insider politician wheeler-dealers got thrown in jail -- by some U.S. Attorney named Christie?

By the way, how does this proposed takeover encourage the private sector to stay in the state?

This takeover may be nothing more than using a fiscal crisis, economic recession and some municipal mismanagement (or worse, in fairness) to execute a large power grab for the State. Let's see who stands to benefit. I'll bet the taxpayer and homeowner will not be on the list.

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