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Atlantic City's finances 'uncertain' as coronavirus cripples economy

{child_flags:top_story}{child_flags:breaking}Virus hits A.C.’s wallet in PILOT, state aid

{child_byline}DAVID DANZIS

Staff Writer

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ATLANTIC CITY — The novel coronavirus has wreaked havoc on government budgets at all levels, but the resort’s heavy reliance on state aid and fluctuating annual casino property tax payments presents a unique challenge going forward.

In 2019, the combination of state aid and the casino’s collective payment in lieu of taxes accounted for nearly 43% of revenue in Atlantic City’s $208 million operating budget. As both of those revenue streams depend on a healthy economy, the longer businesses remain shut to slow the spread of COVID-19, the more worried some local officials are becoming about potentially massive revenue shortfalls.

“It’s more about the uncertainty,” said Council President George Tibbitt, who sits on the city’s Revenue and Finance Committee. “I’m very concerned right now.”

The state Department of Community Affairs, the agency with direct fiscal oversight of Atlantic City as a result of the 2016 Municipal Stabilization and Recovery Act, did not make anyone available to answer questions about the city’s financial future.

Mayor Marty Small Sr., who chaired the municipal finance committee for several years at the start of the state takeover, said the city is on “solid fiscal ground for the foreseeable months ahead.”

“We’re in pretty good shape for months to come, which is a stark contrast from where the city was just a few short years ago,” he said. “We’re keeping an eye on the future, including next year. So we’re not sitting on our hands. We’re prepared to deal with issues as they come in a proactive way.”

Small said city officials were, however, aware that municipal tax collections are likely to be lower than usual since non-casino property owners’ income streams have been cut off or reduced. The quarterly payment deadline has been extended to June 1, and Small was unable to provide an anticipated collection rate.

The fiscal crisis created by the coronavirus has also elicited renewed calls to take a harder look at the casino PILOT law that is directly tied to the industry’s gaming revenue.

Tibbitt pointed out the inherent flaw in the law that allows casinos to pay less during the economic crisis while non-casino businesses and residential property owners have no relief.

“There’s not much more we can do,” Tibbitt said, referring to more than $60 million in cuts to the city budget since 2016. “It just shows what the PILOT has done to Atlantic City, how terrible it is for the city and how no one ever expected something like this to happen. ... (The indefinite shutdown of the casinos) is a part of the PILOT they never planned for.”

Assemblyman Vince Mazzeo, D-Atlantic, was a primary sponsor of the 2017 legislation that was supposed to help stabilize Atlantic City’s finances by eliminating costly casino property tax appeals for a decade. Mazzeo said the bill had been working as intended, but lawmakers never envisioned a scenario where all of Atlantic City’s casinos would be shuttered indefinitely.

“It was going to be a good thing for Atlantic City,” Mazzeo said Friday, “but, unfortunately, no one could predict a pandemic coming down the road like this. So we’re going to have to have a conversation about how to sustain, not only Atlantic City and the casinos and how they’re going to pay their bills, but the whole state of New Jersey.”

The PILOT bill created payment tiers based on the prior year’s total gaming revenue that are divvied up among the city, the school board and the county. In 2019, Atlantic City casinos reported more than $3.2 billion in revenue and will pay out roughly $152 million in 2020.

The lowest tier in the law assumes annual gaming revenue of $1.8 billion and a payment of $90 million. While that worst-case scenario is unlikely, March’s monthly gaming revenue reports showed a 43% decrease compared to the prior year, a clear impact of losing just 15 days after Gov. Phil Murphy ordered the indefinite shutdown March 16.

“We’ve never faced this. Nobody’s faced this. So there are going to have to be new solutions here that can get everybody back to where they have to be,” Mazzeo said. “It’s going to be a slow process to get back to where we were. And, as legislators, we’re gonna have to come up with policies that help us along the way, and that’s a conversation not just about casinos but all businesses to be fair and equal to everybody.”

Murphy has often spoken about the coronavirus’ impact on the state’s finances and recently pleaded with the federal government to provide additional relief. The governor has also frozen nearly $920 in discretionary spending, including more than $44 million in municipal aid.

“The impact of COVID-19 on the state, its economy, and budget and finances is unpredictable and rapidly changing, but the state believes that events surrounding COVID-19 will negatively impact the state’s economy and financial condition,” the treasurer said in a March financial disclosure.

Any losses of state aid would have an adverse impact on Atlantic City’s budget. Sixth Ward Councilman Jesse Kurtz said the city’s budget already relied “to a very large extent” on state aid, even before the pandemic.

“To see the state acknowledge that they’re in a position where budgeted expenses on their end do not have matching revenues, both in real time because of the slowdown in fees and tax collection, but also based on projections with the impact of COVID-19, at some point that does ripple over to the different accounts that deal with transitional aid that is very important for our budget picture,” Kurtz said.

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VERNON OGRODNEK / For The Press  

‘I think there’s light at the end of the tunnel,’ said Paul Sacco, who has coached St. Joseph High School football since 1982. The Wildcats program is one of New Jersey’s best, with 20 state championships since the state Non-Public playoffs began in 1993.


News
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Despite possible closing, Sacco still has hope for St. Joe's

HAMMONTON — Paul Sacco says he’s not ready to stop coaching football.

He believes he’ll be back this fall and again coaching St. Joseph High School in Hammonton.

That’s despite the Diocese of Camden announcing that St. Joe’s would close in June. Several St. Joe supporters are working on a plan to keep the school open.

“There’s always ups and downs in everything in life,” Sacco said.

“I feel we’re going to come out in a better position and do the things we need to do to grow (at St. Joe). I think there’s light at the end of the tunnel.”

When the diocese first announced St. Joe’s closing, the fate of the 65-year-old Sacco was the first thing many South Jersey sports fans thought of.

No one is more identified with St. Joe.

The Wildcats program is one of New Jersey’s best, with 20 state championships since the state Non-Public playoffs began in 1993. Sacco took over as coach in 1982, and his 335 career wins are a South Jersey record.

He grew up in and still lives in Hammonton. He attended both St. Joseph elementary and high schools.

“I’ve been at St. Joe since I was 4½ years old,” he said.

Former Wildcats standout C.J. LaFragola said Sacco is more than just a football coach to the school. Sacco is easy to approach and willing to talk about any subject ranging from what he had for dinner last night to upcoming opponents.

“He’s always open to communication,” said LaFragola, a 2015 St. Joe graduate. “He’s positive all the time. You can have funny conversations with him. He could say, ‘Hey, I’m the coach. What I say goes.’ But he’s always open to suggestion. He’s a humble guy. That’s the thing that resonates with everybody.”

Sacco, like just about everybody in the St. Joe community, was stunned by the diocese’s announcement.

“When it was first announced, I don’t think I got off the chair from 10:30 in the morning until 6 at night,” he said. “The kids were calling. Parents were calling.”

Many alumni have also checked in with Sacco.

He’s been getting more than 20 phone messages and multiple texts each day.

“All I do is talk on the phone,” he said. “My ear hurts.”

Sacco said when the announcement was first made, he felt bad for the young teachers and coaches at St. Joe.

“I have cherished the 37, 38 years that I’ve been able to teach, coach and be involved at St. Joe,” he said. “We had a great run, but I’m not ready to stop coaching. From the word go, I knew there were ways out of this.”

St. Joe finished 9-2 last season, losing to rival Holy Spirit 38-0 in the State Non-Public II title game.

The Wildcats are set to return nine starters on both offense and defense, including several Division I recruits.

After the announcement of the possible closing, several schools, many of the them from North Jersey, reached out to current players trying to gauge their interest in transferring, Sacco said.

He cautioned St. Joe’s upcoming fall opponents to hold off on trying to find other games just yet.

Sacco speaks to his players almost daily either on the phone or through Zoom meetings because of the COVID-19 pandemic.

“I think our kids are pretty upbeat,” he said. “They’re ready to go.”

In a telephone interview last week, Sacco’s voice never wavered when he talked about the future and St. Joe.

“I trust the people that are in our corner and in my corner,” Sacco said. “I grew up with these people. They’re great people. We plan on our school still being there. We plan on being in red and white. We plan on still being the Wildcats and playing (hard) as usual.”

GALLERY: Look back at St. Joes head football coach Paul Sacco's career

pRESS ARCHIVES  

Sacco watches the action during the last minute of the 2016 game against Mainland Regional that would give him his 300th win as head coach.


Education
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Catholic school closings in South Jersey follow national trend, but hope remains

NORTH WILDWOOD — If the faithful of Cape May County have their way, instead of being closed at the end of the school year as planned, Wildwood Catholic will be reborn this fall into a new K-12 academy, merging with Cape Trinity Catholic elementary school.

The community is rallying for the second time in a decade to save its Catholic schools, two of the five schools the Camden Diocese said last week would close in June due to “dwindling community support” in enrollment and fundraising.

“It’s like déjà vu,” said North Wildwood Mayor Patrick Rosenello, a Wildwood Catholic alumnus and parent.

Declining enrollment has had a negative impact on both private and public education across South Jersey, where public schools are seeing less state funding and private schools are closing.

Mike Walsh, spokesman for the diocese, said the decision to close the schools was mutual between the diocese and school officials, but was exacerbated by the COVID-19 pandemic that closed all schools in the state in mid-March.

“The Office of Catholic Schools and Diocesan Finance Office have been in dialogue with the principals, pastors and heads of schools about the viability of Catholic schools in Wildwood, Hammonton and Collingswood for years. Primarily, over the past several years there had been evidence of a growing inability to sustain enrollment and meet expenses,” Walsh said. “While budget models, and even changes in school paradigm, were offered by the schools, none proved to be capable of sustaining them.”

According to the National Catholic Educational Association, Catholic school enrollment reached its peak in the early 1960s with more than 5.2 million students in almost 13,000 schools across the nation.

Since 2010, the nation has lost nearly 1,000, or 13%, of its Catholic schools and 382,044, or 18%, of its students.

According to the New Jersey Catholic Conference, there are 245 Catholic schools in the state across several dioceses, with 37 in the Diocese of Camden that covers all of South Jersey. In 2010, New Jersey had 280 Catholic schools.

If the diocese’s planned closings move forward, the number of Catholic elementary schools in South Jersey would be 25, plus seven high schools, none of which are in Cape May County.

“It is absolutely a blow for Cape May County,” Rosenello said, especially for the families of the 330 students who are left without a nearby option for Catholic secondary education.

Rick Moretti, of Rick’s Seafood in North Wildwood, lives in Sea Isle City and sends his son to Wildwood Catholic. He is doing his part to help the school, donating to the fundraiser. He said he is luckier than most because sending his son to Holy Spirit wouldn’t be too much of a change in commute. For Catholic families in the southern end of the county, the drive would be a hardship.

“What if you live down in the Wildwood Crest area, what’s your opportunity if you wanted to go to a Catholic high school?” he asked.

Similar sentiments were felt in 2013, when Sacred Heart Catholic High School closed in Vineland, leaving Cumberland County in the same predicament as Cape May is facing.

Since 2007, the diocese has closed 13 schools. In 2010, it announced that Wildwood Catholic, where enrollment fell 50% in a decade, would close and three of the county’s Catholic elementary schools would be merged into Cape Trinity.

The community was able to save the schools by fundraising and combining buildings, but the schools remained separate entities.

The plan for Wildwood Catholic Academy, which was already in the works in the fall, but put into high gear after last week’s announcement, calls for merging the elementary and high schools.

Walsh said there was hope at the diocese that the Wildwood Catholic Academy model would prove feasible, but to date recruitment efforts have fallen short. He said that since 2000, Wildwood Catholic High School’s enrollment has dropped from 360 to 139, or 61% of its enrollment. Saint Joseph High School’s fell 387 to 206, a drop of 46%.

“Despite financial assistance from the diocese, donors, parishioners and alumni, there is no expectation that these declines will plateau or reverse,” Walsh said. “If anything, the economic fallout of the pandemic is expected to worsen the viability of these schools, especially in a tourist-supported area like Wildwood.”

Wildwood Catholic Principal Joseph Cray, who is leading the effort to save the school, was unavailable for comment.

Meanwhile in Hammonton, similar efforts are being made to save St. Joseph, a staple of the community since 1935.

Hammonton Mayor Steve DiDonato said not only are St. Joseph’s elementary and high schools pillars in the town, they are also economic drivers as both schools are located in the downtown.

“I just hope that the group that’s out there trying to save the school is successful,” he said.

GALLERY: Catholic Schools Week celebrations at South Jersey Catholic schools