Dovey makes a perfect case for not giving ACUA a monopoly

Dovey makes a perfect case for not giving ACUA a monopoly

By Seth Grossman, Political Columnist

(Reprinted from February 24, 2010 Current-Gazette Newspapers of Atlantic and Cape May Counties, http://www.shorenewstoday.com/news.php?id=7445)

“Insolvent:

1.) Unable to pay debts as they fall due in the usual course of

business.

2.) Having liabilities in excess of a reasonable market value of

assets held.”

? Merriam Webster’s Collegiate Dictionary, 10th Edition, 1994.

The Atlantic County Utilities Authority is insolvent. It borrowed $86 million in 1992, and still owes $44 million. The ACUA does not have enough money to make the $7 million payment of principal and interest due on March 1. It must then make six more $7 million payments after that to pay the debt in full.

I learned this during a long but riveting public forum set up by Jim Curcio, chairman of the Atlantic County Board of Chosen Freeholders, last week.

I also learned that I was wrong in thinking that Atlantic County freeholders guaranteed this debt when they bailed out the ACUA in 1998. The freeholders only let the ACUA collect an extra fee on all trash collected in the county ? even trash picked up by others. This fee was later knocked out in court as an unconstitutional restriction on interstate commerce.

The Atlantic County Utilities Authority is not the only government agency that is insolvent these days. The national government of Greece wants a bailout because it can’t make its payments. The California city of Vallejo filed for Chapter 9 bankruptcy because it cannot pay all its cops and firemen who retired early with huge pensions.

Every year, New Jersey state government pays roughly $4 billion to dozens of authorities, school districts and local governments, including the state pension fund, that can’t pay their debts. This won?t last very long because our state government is now broke.

Rick Dovey, the $143,000 head of the ACUA, wants a bailout from Atlantic County government. Atlantic County freeholders can do this by paying the debt directly and raising everybody’s county property taxes. Or they can give the ACUA a monopoly on all trash dumping in the county. Then the ACUA can charge whatever it wants, and everybody would be forced to pay through higher local property taxes and fees paid by local businesses.

This would be a hardship for many, and it may sink some businesses. The most important question is, do the freeholders have to do this?

Rick Dovey spoke emotionally for more than an hour at the forum. But he never gave a convincing ?yes? to that question. Instead, like Captain Queeg in the movie “The Caine Mutiny,” he explained in detail what happened 15 to 20 years ago when tens of millions of dollars were wasted.

Dovey spoke of how the previous freeholders delayed picking a new dump location. He told of how state officials would not let the ACUA build the incinerator it was forced to design. He complained that the ACUA was forced to pay a high “host community fee” to Egg Harbor Township, make a ?bad deal? with Mercer County and pay too much for much of its land. And finally, Dovey said the ACUA was given permission to spend its $8 million reserve of borrowed money to delay the day of reckoning. This is why the ACUA had to charge $120 per ton ? nearly three times the free-market rate ? when it had a monopoly in 1990s.

But in 1999 the monopoly ended and the ACUA dropped its rates to $40 to $50 per ton. State officials who before were uncooperative suddenly gave the ACUA all the approvals it needed, along with a $5.6 million gift each year to pay back the debt.

Dovey inadvertently presented a perfect case for never again giving politicians a monopoly to run the county?s trash business!

Dovey said that the state?s Local Finance Board will force county taxpayers to pay if the ACUA misses its $7 million payment. What law allows that? How can Atlantic County government be forced to pay a debt it never incurred or guaranteed?

Did the Local Finance Board make that threat in writing? If so, why not make it public so we can all see if it is supported by law? Did the highly paid bond attorneys for the ACUA give any opinions? If so, their written opinion letters should also be made public.

Former Ventnor Mayor Tim Kreischer asked, “Will the ACUA shut down if it fails to make its $7 million bond payment next month?” Rick Dovey did not answer that question. But did the Trump casinos shut down when they missed their bond payments? Didn?t Trump use that default to get himself a better deal?

Somers Point attorney Seth Grossman appears live on WVLT-92.1FM heard throughout South Jersey 8-9 a.m. every Saturday. For information see www.libertyandprosperity.org, email grossman@snip.net or call (609) 927-7333. Breakfast discussions are 9:30-10:30 a.m. every Saturday at the Athena Diner, 1515 New Road, Northfield.

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