There She Is -- New Jersey Bestows Public Cash on Miss America

  • Agency subsidizes pageant without clear statistics of benefit
  • Atlantic City generates funds it doesn’t control, faces crisis

The Miss America pageant in Atlantic City in 1969.

Source: Bettmann Archive via Getty Images

The Miss America pageant was dreamed up in the 1920s to bring money to Atlantic City. In 2016, that’s what New Jersey considers as economic development for the beleaguered seaside resort.

The beauty contest will return Sept. 11 -- thanks in no small part to public dollars. With Atlantic City on the financial brink, the New Jersey agency that subsidizes the pageant has nearly doubled its contribution for the next three showcases of sequins and heels. 

What’s worse, the authority’s prodigious pot of money comes from millions generated by Atlantic City casinos and tourists that the community, despite its entreaties, doesn’t receive. At a time when Governor Chris Christie is pressing Atlantic City to tighten its belt, the state continues to plow funds into projects such as Miss America, which appears to have done little, if anything, to help the local economy.

It’s the latest example of excess at the Casino Reinvestment Development Authority, the politically-controlled entity that funneled cash to projects around New Jersey and to this day continues to bankroll renovations of casinos. Even at the height of its East Coast gambling monopoly, Atlantic City’s poverty rate was high. Empty lots and decrepit houses still pockmark steps from the boardwalk in the city where the unemployment rate is 10 percent.  

“If CRDA had stayed on course over all these years, we might not be where we are,” said David Sciarra, a former deputy public advocate who had helped write the law for the agency. “CRDA lost its way fairly quickly.”

John Palmieri, the authority’s executive director appointed by Christie, said it acts as a partner to the city, which he said had long failed to create jobs and housing. The agency has committed to $2.2 billion in projects since 1986.

“People sometimes fail to appreciate the investments that we have made and the changes we have helped to create,” Palmieri said. “CRDA isn’t the only vehicle to create improvements. We’ve done our part.”

The authority’s powers include the ability to condemn and acquire property-- it once tried to seize a widow’s boardinghouse for the benefit of a now-shuttered casino then owned by Donald Trump, the Republican presidential nominee. In addition to billions of gaming taxes that go to the state, casinos fork over another levy –- 1.25 percent of collections and 2.5 percent of internet wagering –- to CRDA, which was created in 1984 to boost Atlantic City. The authority also collects taxes and fees generated from hotel rooms, parking spots and sales of alcoholic drinks in the city.

Estimated Benefits

Easy cash flowed for decades until neighboring states started legalizing gambling, cutting into New Jersey’s take and crippling the city’s tax base. Still, that didn’t defray the state’s enthusiasm for the Miss America pageant, which had decamped from its historical roots to Las Vegas in 2006. (In the 1950s, the manufacturer of a swimsuit that a Miss America refused to wear started the rival Miss Universe contest, eventually owned by Trump.) The CRDA subsidy and lobbying by Christie’s lieutenant governor lured Miss America back to Atlantic City in 2013.

Documents from a public-records request show an attempt to justify the subsidy. NW Financial Group LLC, the authority’s financial adviser, wrote a six-page memo estimating that the annual competition of swimsuits and talent routines would draw a crowd of 129,200 who would spend $32 million and generate $2.48 million in taxes. The analysis, which didn’t include any figures from past pageants in Atlantic City or Las Vegas, wasn’t dated. CRDA officials told Bloomberg News that it was prepared in 2013 before the beauty contest.

Important Brand

The pageants from 2013 through 2015 cost the agency about $7.1 million, records show. During that time, a third of the casinos closed and the city’s tax base halved in size. CRDA in February approved $12.2 million for the next three pageants. The authority said no study was done to determine the impact, if any, of the three past contests, for which many receive free tickets and meals.

Asked for the attendance numbers, a CRDA spokeswoman referred the question to the Miss America Organization, which said it had no comment.

“We believe it’s an important brand and it brings benefits that are measurable to the city,” Palmieri said of Miss America, adding that the broadcast draws national exposure. “We’re pretty comfortable with the commitment that we’ve made.”

Windfall Kept

The increased subsidy preceded a significant change in the authority’s finances-- one that could jeopardize pageants after 2018. As part of May legislation to prevent a historic default in Atlantic City, the secondary tax on casinos, about $34 million last year, will now go directly to the community for 10 years to help pay its debt.

CRDA, which has a surplus of $73 million, still keeps its windfall from other taxes and fees, which last year totaled about $67 million. But the loss of a revenue stream may mean more of a focus on redevelopment projects, Palmieri said.

That may force the authority to adhere more closely to its original purpose from three decades ago. Whether to renew Miss America’s contract, Palmieri said, will be up to the next governor.

Atlantic City Mayor Don Guardian said the pageant wasn’t worth $12.2 million. As the city faces a Nov. 3 deadline to come up with a fiscal blueprint or fall under an unprecedented state takeover, New Jersey shouldn’t ignore the misuse of Atlantic City’s money, he said. “The state is the epitome of wasteful spending."

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