Atlantic City Mayor Don Guardian said Tuesday the Municipal Utilities Authority should be generating about $6 million in new money annually for the city, funding the municipality needs to remain financially solvent.
“The water is our oil - our forefathers gave us the water, and we control it,” Guardian said, adding that while he opposes selling or leasing the authority, it remains one of the few resources the city currently controls that could become a new revenue source.
As if speaking to state officials, Guardian reviewed the $40 million in budget reductions and hundreds of layoffs his administration has enacted, concluding, “I don’t have anything else to give you.”
However, a draft Ernst & Young study of the MUA completed in June and obtained by The Press last week concluded the authority could bring in $9.3 million more each year than it currently does through a combination of cost-cutting and new revenue generation.
That document also calls for significant MUA layoffs. Guardian said he’s never seen the Ernst & Young study, but was briefed on it. He said he took job cuts off the table, resulting in the $6 million revenue figure.
The MUA is currently independent from the municipality, and directs about $600,000 to the city each year in accordance with state law.
Guardian said that if the authority can find a way to deliver about $6 million to the city, he would not object to it remaining independent.
That arrangement is currently being discussed with MUA officials, and is the authority’s preference, according to MUA attorney and spokesman Fred Bor.
"We are very interested in helping the city if we can,” Bor said Wednesday. “We’re going to try very hard to get to a point where we can pay an amount we can afford."
But the mayor also presented an alternate path forward, one where the MUA would be dissolved and turned into a city utility.
Under that scenario, layoffs wouldn’t be sought, and existing labor contracts, including those of authority board members, would be honored, Guardian said. However, he added that positions freed up through retirements might not be replaced.
Rafael Valentin, a staff representative for AFSCME Council 71, which represents most of the authority’s workforce, expressed concerns that once MUA employees became city workers, they would be more susceptible to layoffs in the future.
To that point, Guardian repeated that any ordinance dissolving the authority would include language protecting the negotiated contracts of employees.
Echoing one of Ernst & Young’s key findings, Guardian said a major part of the MUA’s new revenue stream would come from increasing the rates charged to Atlantic City’s commercial customers, as well as purchasers outside of the city.
Guardian praised the quality of the water the authority provides, but described the organization as “well-run, not efficient,” due to the fact that it has never been tasked with maximizing revenue.
As an example, he said New Jersey American Water, a private company, buys authority water and then resells it at a 210 percent markup.
Residential water rates would be kept at their current rate of increase, about 2 percent per year, Guardian said, adding that large purchasers, like casinos, shouldn’t mind paying more for water, considering the size of the tax appeals they have won in recent years.
City Council would have to vote to dissolve the authority before it could become a city utility. Council unanimously voted down dissolution on May 6, following a motion by Councilman Marty Small.
During that Council meeting, Small attempted to add the words “in perpetuity” to the ordinance in question, which he intended to settle the matter permanently. But the ordinance’s language was not changed, according to the meeting’s official minutes.
A 2007 Council rule prevents failed ordinances from being voted on again for six months. However, a 2008 rule gives Council the ability to bring back failed measures with a majority vote.
On Tuesday, Small said he would welcome more money coming to the city from the MAU, but repeated his consistent opposition to dissolving it or bringing it under the city.
More broadly, he said all such conversations remain hypothetical until hard numbers are presented to council.
Councilmembers Timothy Mancuso and Moisse Delgado offered similar statements Tuesday.
“I want to see how the numbers work in black and white,” Mancuso said.
“I’m waiting for reports to be presented,” Delgado said. “Everything is considerable, but the most important thing is making sure the water that comes from this authority stays untainted, and not pimped and sold without the benefit coming to the community.”
Guardian said that if the dissolution proposal is brought back to Council, members will be provided with a detailed analysis explaining the administration’s revenue generation claims.
Besides the draft document published by The Press, such an analysis has yet to be publicly issued by Ernst & Young, the MUA, or the administration, though officials have said since May that it is being developed.
Councilman Delgado’s sentiments were reflective of many of the comments offered at a Tuesday meeting where Guardian discussed his plans.
Multiple residents argued the MUA discussion is just the latest example of how the city’s resources are being used for the benefit of outside players, at the expense of locals.
“This is another play (for) big people who want to come in and make money off of us,” said
Alfreda Mills, 81, despite Guardian’s insistence that he opposes selling the authority.
“If it ain’t broke, don’t fix it,” said fifth ward Council candidate Sharon Zappia, adding that there’s nothing the city could do to increase the MUA’s revenue that the authority couldn’t do itself.
Toward the end of the meeting, Lena Smith, an organizer with the environmental group Food & Water Watch, which opposes any changes to the authority, said treating water like a commodity is inherently risky. The incentives in that scenario, she said, would skew toward cutting quality in the name of increasing revenue.
But Guardian reiterated his commitment to maintaining water quality, and said the city would have to prove it could run the water system as well as the MUA does before taking further action.