Gambling mecca gone bad-Atlantic City, NJ

By Martin J . Milita, Jr., Esq.

It seems like only yesterday that Detroit filed for bankruptcy. It’s actually been more than two years since the initial filing, and almost a year since a judge approved the bankruptcy plan.

In the East, the fortunes of Atlantic City have always followed casinos, which is not a good sign in today’s economy. With four of the big gambling houses bankrupt, Atlantic City finds itself hurting for revenue.

The city has a $100 million hole in its budget. This is made worse by the fact that it keeps losing tax refund lawsuits. So far the city has been forced to refund $186 million in taxes after Casino owners contested their assessments.

But the pain isn’t all on the revenue side.

Atlantic City employs 29 city workers per 1,000 residents, almost triple the rate of Newark, with 11 employees per 1,000 residents, and Jersey City, with 10 employees per 1,000 residents. The mayor recommended laying off more than 200 workers, but that would still leave the city with a much higher worker-per-resident ratio than other cities.

So far, the New Jersey government, including the governor, has been quiet on the possibility of a bankruptcy in the state. The state has gone so far as to give the city more time to repay state loans. If Atlantic City goes under, it would be the first municipal bankruptcy in New Jersey since the depression.

While the state government hasn’t mentioned that the city might go bankrupt, it hasn’t taken that option off the table either. It could be that the governor wants to keep all avenues open, since he has the same financial issues at the state level. As long as bankruptcy is possible, he might have more leverage when negotiating pension reforms with unions.

Many other towns, counties, and states have fiscal woes that will only be addressed through some version of bankruptcy or negotiated restructuring. By the time that happens, investors and taxpayers have already lost.

Martin J. Milita, Jr. Esq. is senior director at Duane Morris Government Strategies, LLC.

Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices.

Visit his blog at: https://martinmilita1.wordpress.com

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Cooperative purchasing as a public contracting concept.

Rather than each governmental entity endlessly repeating a time-consuming full-and-open competitive process for every buy, cooperatives conduct competitions for multiple award contracts, creating a contractual framework and facilitating faster, lower-cost competitions at the order level. In some cases, cooperatives also are able to aggregate requirements and pool money, lowering costs for both buyers and sellers.

There are three main purchasing co-ops operating nationally for U.S. nonfederal government and other nonprofit entities in addition to the federal cooperative purchasing program run by GSA. These purchasing co-ops allow for technology manufacturers, distributors, resellers and dealers to participate. And a glance at the products and services they offer shows they quickly adapt to changing IT market conditions by including cloud, cybersecurity and other software services.

NASPO provides the broadest-ranging purchasing co-op in terms of commodities offered. Its ValuePoint site brings together multiple award programs established by a single lead state, but made available to all 50 states and the District of Columbia. It also maintains a list of upcoming procurements and the states creating them. So while there is a lead state for each commodity, ValuePoint provides a single clearinghouse for a variety of commodities and multiple-award contract programs for everything from fire trucks to public cloud hosting services (lead state: Utah) and commercial off-the-shelf software products (lead state: Arizona).

Dating back to 1982 as the Michigan Collegiate Telecommunications Association, MiCTA has branched beyond its original charter — to serve as a forum to share information among universities — into a state and municipal acquisition association for a variety of network products.

These products include hardware such as switches and other data center equipment, and services such as voice over Internet protocol (VoIP), cabling and voice/video conferencing. MiCTA is based in Saginaw, Mich. Buying entities pay a small fee to belong to MiCTA, and its membership spans all 50 states. Some states themselves are members, as are many county and city governments.

A third purchasing co-op arrangement, U.S. Communities Government Purchasing Alliance, dates to 1996. It grew from a partnership between the Association of School Business Officials, the National Association of Counties, the National Institute of Governmental Purchasing, the National League of Cities and the U.S. Conference of Mayors. Customers are public schools and colleges, nonprofits, and state and municipal agencies. Like NASPO ValuePoint, U.S. Communities carries no membership fees. It works similarly to ValuePoint in that a single agency forms the lead for a particular technology or service contract, but the contract is available for all of U.S. Communities members. Technology contracts in place include several cloud providers, document and print services, telecommunications, and systems integration services. It claims 90,000 buying organizations are members.

Then there is the federal buying cooperative operated by the General Services Administration. For decades, Congress barred GSA from offering its multiple-award schedule contracts for use by nonfederal government entities. Why? For many years, coalitions of resellers, led by fire apparatus dealers, said such an arrangement would destroy the local markets they enjoyed for supplying nationally marketed capital equipment. That concern faded, or at least Congress avoided a vocal constituency by enabling GSA to offer Schedules 70 (IT goods and services) and 84 (security, law enforcement and, yes, firefighting and rescue equipment).

GSA has added several more narrowly focused schedule-based blanket purchasing agreements, including those for continuous network diagnostic and mitigation services and wireless voice/data products. From the early days, GSA structured the schedules as centrally managed contracts and catalogs that can also include participation by local dealers.

GSA markets these purchasing cooperatives to state, local and tribal governments and while the program is gradually growing, it only accounts for about $1 billion per year. Clearly it suffers a bit from state-specific cooperative programs where contracts are based on the GSA schedule and managed for the benefit of in-state cities, counties and educational institutions structured to avoid paying fees back to GSA. Thus we see that competition between the various cooperative purchasing programs is quite robust.

It would appear that cooperative purchasing as a public contracting concept is here to stay and will only grow as more buying entities become more comfortable with leveraging framework contracts managed by others.

Virginia May Publicly Finance Highway Expansion

Virginia may elect to publicly finance the expansion of a heavily traveled interstate in metropolitan Washington, D.C., and keep the toll revenue to be used for other regional transportation projects. An analysis released this week shows that the state could save up to $500 million in upfront costs by expanding Interstate 66 via a design-build contract while retaining the estimated $200 million to $500 million in toll revenue over 40 years, reported The Washington Post.

Virginia’s  Public-Private Transportation Act became law in late March.

“As we work to get taxpayers the greatest value for every dollar they spend on this project, this analysis shows that there is merit to considering moving forward with a design-build contract,” Virginia Transportation Secretary Aubrey Layne said. “Our administration would welcome a private partner on I-66, but they must propose the best deal for Virginia. Until we receive a better private proposal, these preliminary numbers indicate that a public finance option may be in the best interest of Virginia taxpayers.” (Credit AP).

Layne said the figures were generated by leading  public- and private-sector financial analysts using the same rigor he uses investing his own money. He said he’s confident the numbers are solid but thinks it’s important to “throw them out there for everybody to take shots. … If you’ve got a better deal, we’d like to hear about it.” (Credit AP).

The proposed expansion project, which Layne described as probably the most important transportation project in the state, would feature new toll and carpool lanes 25 miles west of the Capital Beltway.

Layne said keeping the project under state control would not be without risks. First, approval from the state’s General Assembly would be needed in some variations of the plan. Second, state leaders would have to budget $400 million to $600 million in upfront public funding. Estimates peg the state’s upfront cost at $900 million to $1 billion if a P3 is initiated.

Virginia has long been hospitable to handing over public transportation projects to private companies, like it did with new toll lanes on Interstate 95 and the Beltway, and a tunnel being built in Hampton Roads.

Layne said the state has had a good partnership on P3s that developed a network of Northern Virginia toll and carpool lanes, though there are some long-term risks. For instance, under certain circumstances, the state would have to pay the contractor if too many people carpool.

Del. S. Chris Jones (R-Suffolk), chair of the House appropriations committee, praised the secretary’s approach toward the highway expansion. “He’s taking the right approach. The P3 process was always supposed to compare what the public option would cost versus the private option,” he said. “The objective is to make sure that we get the best value for the taxpayers’ investment. Whether that’s going the P3 route or the state doing it on its own, I’m agnostic in that regard. ”

Jones championed legislation this year that establishes the requirements for a finding of public interest and requires such a finding prior to an initiation of a P3 procurement. The bill also establishes the Transportation Public-Private Partnership Advisory Committee to determine whether a highway or rail project meets the finding of public interest. According to a VDOT announcement, Layne has requested the advisory committee hold a meeting to review and consider procurement options within the next 45 days.

NJ Senate Panel Backs Housing Tax Credit For Atlantic City

A New Jersey Senate committee on Tuesday approved legislation that would create a new tax credit program to encourage the development of owner-occupied housing in Atlantic City as the municipality works to diversify its tax base and recover from a rash of casino closings.

The New Jersey Senate Budget and Appropriations Committee backed the formation of the Atlantic City Growth Tax Credit Program in a 11-2 vote, though the bill drew concerns from Democrats who suggested projects elsewhere in the state should have a shot at the incentives and Republicans who disagreed with the size of the credits.

The program would fall under the umbrella of the New Jersey Housing and Mortgage Finance Agency and provide developers of nonrental housing in Atlantic City with gross income tax credits of up to 80 percent of their costs for land acquisition, capital improvements, engineering fees and architectural fees.

Projects covered under the bill, S2654, couldn’t be more than eight stores and would have to include at least eight newly constructed residential units. At least 80 percent of the project’s units would have to be owner occupied.

During Tuesday’s hearing, Committee Chairman Paul Sarlo, D-Bergen, said he supported the proposal but added that other New Jersey municipalities such as Paterson and Passaic could also benefit from such a program.

“It should be expanded,” Sarlo said. “We all want to help Atlantic City, but I get frustrated sometimes.” (Credit Bergan Record).

The size of the proposed tax credit didn’t sit well with other lawmakers. State Sen. Sam Thompson, R-Middlesex, called the incentive excessive, while state Sen. Jennifer Beck, R-Monmouth, urged her colleagues to take a harder look at the potential cost.

“I think there should be some type of tax credit, but I just feel like that encompasses a very big number and should be revisited,” Beck said. (Credit Bergan Record).

The bill was previously advanced by the Senate Economic Growth Committee in January. Sponsors of the measure include state Sens. Jim Whelan, D-Atlantic, and Robert Singer, R-Ocean.

Nearly three-quarters of Atlantic City’s residents are tenants, according to the bill. Meanwhile, homeowners are facing a serious hardship as the city’s property tax burden shifts from its gaming sector and other commercial businesses, the bill says. Expanding the city’s pool of residential property taxpayers would help lessen that burden, according to the bill.

The HMFA would stop accepting new applications for the program by either Jan. 1, 2020, or when the city’s proportion of homeowners to renters has evened out to at least 50 percent.

Twelve casinos in Atlantic City made up 70 percent of annual property taxes as of 2013, but a flood of closures has left the city with eight operating casinos and a tax base that has fallen from $20.5 billion in 2010 to $7.3 billion, according to a March report from the city’s state-appointed emergency manager, Kevin Lavin.

Casino tax appeals have only added to that strain. The city has taken on $186 million in debt to repay casino tax reassessments for 2010-13, but there were $126 million in resolved tax appeals that didn’t have bonding behind them, the report said.

Senate Passes 2016 Budget in a “vote-a-rama.”

Senators voted 52-46 on the fiscal year 2016 budget resolution after a nearly day-long session that began Thursday morning and stretched well into early Friday, with lawmakers considering more than 50 individual amendments and a package of noncontroversial measures, part of a process colloquially known as the “vote-a-rama,” following three previous days of debate in which senators had agreed to 11 proposed amendments.

Among the nearly 30 amendments approved by senators on Thursday and Friday were measures to roll back the estate tax and provide “middle class tax relief,” as well as a pair of amendments seeking to block a carbon tax and removing a block on highway funds for states who don’t submit implementation plans for proposed U.S. Environmental Protection Agency regulations.

Democratic lawmakers saw several of their proposed amendments pass, including a proposal to expand access to paid sick days for workers, as well as a measure seeking to recognize same-sex marriage for the purposes of Social Security and veterans’ benefits, with 11 GOP senators joining the minority in that vote.

The rejected measures included two proposals to increase defense spending beyond the increases already set out in the budget, a measure to increase the federal minimum wage, and moves to cut clauses written into the resolution that would slash more than a trillion dollars in federal Medicaid and Medicare funding over the next decade.

Further, senators rejected a bid to close purported tax loopholes related to “offshoring,” presumably to leave the proposal for a more comprehensive tax reform effort.

The Senate’s final vote came after the House of Representatives on Wednesday approved its own proposed budget plan in a largely party-line vote, after a single day of debate which saw it consider only a limited series of proposed amendments, including alternative budget plans put forward by progressive and conservative caucuses.

House lawmakers took up only one amendment, proposed by House Budget Committee Chairman Tom Price, R-Ga., seeking to remove the requirement that $20 billion of $613 billion in proposed defense funding be made contingent on finding offsets elsewhere in the budget — publicly criticized by several GOP lawmakers as making that funding effectively illusory — and then adding an additional $2 billion in defense funding.

The Senate budget plan provides about $1.16 trillion in discretionary funding for FY16, with mandatory funding bringing total spending up to around $3.8 trillion.

Over the long term, it seeks to eliminate the federal deficit and reach a planned surplus in 2025, through about $5.1 trillion in spending cuts spread across a variety of both discretionary and mandatory federal programs — including the full repeal of the Affordable Care Act — with the exception of defense spending, which would be ramped up.

The House plan is similar, although more aggressive in its planned cuts and intended timeline to eliminate the federal deficit, with $5.5 trillion in planned cuts to reach a surplus beginning in 2024.

While the two chambers’ budget plans — which are subject to further reconciliation — do not actually implement any specific spending measures, they are meant to be used by appropriators as a guide when setting down FY16 appropriations bills later this year.

Congress to seek changes in Fracking Rules

But the Obama administration has maintained that the current rules are outdated after technological innovations that have greatly improved the drilling method’s success and expanded its use. It also maintained that 19 of the 32 states in which the rule would apply lack fracking-specific rules.

“It has been very important to the United States in terms of energy independence and also bringing down the price of oil because of increased supplies. So it has been very important, but it also is out ahead of where regulations have been, and that is why we have chosen to put these regulations in place … where fracking has gone — the pressures, the horizontal drilling — all of that is new and our regulations have not kept pace,” Jewell said.

Litigation is typical for new energy and environmental regulations. But while some rules have questionable legal authority — the section of the Clean Air Act on which the proposed Environmental Protection Agency emissions rule for existing power plants relies, for example, has little case law under it — the fracking regulation is less ambiguous.

“I would agree on that,” Kathleen Sgamma, vice president of government and public affairs with the Western Energy Alliance, told the Washington Examiner. “It is hard to challenge regulation.”

Still, Sgamma said the Interior Department’s case is far from ironclad. Aside from the potential flouting of the Administrative Procedure Act, she noted Indian tribes have found fault with how the Obama administration consulted them during the rule-making process.

The rule would apply to energy development on tribal land as well as federal land. Oil and gas resources are a significant revenue source for tribes, accounting for $1.1 billion in federal royalty disbursements in fiscal 2014, according to Interior. That’s more than double the $534 million tribes received in fiscal 2008, before the U.S. drilling boom took off.

Janice Schneider, Interior’s assistant secretary for land and minerals management, said tribes were very much involved in the process.

“We held two sets of regional meetings [in 2012], which yielded substantive discussions on topics that included the applicability of tribal law, validating water sources, inspection and enforcement, well bore integrity and water management,” Schneider said. “Additional individual consultations and larger meetings with tribal representatives have taken place since that time.”

But Republicans on the House Natural Resources Committee said some tribes have told them that wasn’t the case. Committee staff said they’re reaching out to tribes to see if they have concerns about the final rule.

“Tribes with mineral resources were very unhappy when it was first proposed — especially because they were not consulted and since then they have weighed in. The tribes were also unhappy with the substance of the rule. Probably more than anything, what upsets them is that lands held in trust for Indians were being treated under the rule as if they were publicly owned lands,” committee spokeswoman Julia Bell told the Examiner.

THE U.S. SENATE TO DECIDE THIS WEEK THE OIL THAT FLOWS THROUGH THE KEYSTONE XL PIPELINE AND THE SOURCE OF THE STEEL USED TO BE USED.

The Senate is expected to vote on as many as three amendments to GOP-backed legislation to authorize the TransCanada Corp., pipeline on Tuesday, with more than four dozen other possibilities on the horizon.

Few are without controversy, and many are meant to send a message or put senators in a difficult spot, casting votes on such issues as protectionism, oil spills and climate change.

The first three amendments readied for floor action are:

  • A proposal from Sens. Ed Markey, D-Mass. and Tammy Baldwin, D-Wis., that would bar oil transported through the Keystone XL pipeline — and any refined petroleum fuel products made from it — from being exported out of the United States. Waivers could be issued by presidents if they decide it is in the national interest.
  • An amendment by Sen. Al Franken, D-Minn., that would insist that iron, steel and manufactured goods used in the construction of the Keystone XL pipeline be produced inside the United States. An exception could be made if the material is not reasonably available or in satisfactory quality inside the United States, or if using U.S.-sourced supplies would boost the cost of the components by more than 25 percent.
  • A broad bipartisan measure from Sens. Rob Portman, R-Ohio, and Jeanne Shaheen, D-N.H., designed to promote energy efficiency, with new voluntary initiatives aimed at encouraging commercial building owners and their tenants to pare power consumption, requirements for federal agencies to coordinate on energy saving information technologies and a mandate for some federally leased buildings to disclose data about energy usage. The amendment is a pared-down version of a broader Shaheen-Portman energy efficiency bill, trimmed to match a version that previously passed the House.

Supporters of the amendments on oil exports and American steel say they are necessary to ensure the 1,170-mile-long pipeline provides some value to the United States.

Pipeline backers say the project would already provide value to the United States in the form of construction jobs when it is built and by ensuring a supply of heavy crude to Gulf Coast refineries that would process it into gasoline and other petroleum products.

Sen. Lisa Murkowski, R-Alaska, the chairwoman of the Energy and Natural Resources Committee who is managing the bill on the floor, signaled she opposes both proposals.

“As much as I support Buy-American and making sure that we receive the benefit of these jobs from creating these precedents, I’m concerned about the Congress setting a precedent here,” Murkowski said of the Franken amendment. “I think it puts us on a potentially pretty slippery slope: If we’re going to set the precedent here for Keystone XL, why wouldn’t we do it for other projects, wind turbines? Why not on our vehicles, on our autos? Why not everything?”

Both Democrats and Republicans have advanced proposals designed to ensure the bitumen harvested from Canada’s oil sands — the hydrocarbon that would be diluted to flow through Keystone XL — is taxed on par with other crudes.