Chris Christie Reveals Plans for Atlantic City Takeover

By Anthony Bucci, Editor, New Jersey Business On Jan 27, 2016

Governor Chris Christie on Tuesday announced a plan that calls for the state to take control of Atlantic City’s finances and reduce the size of its government, which is currently $240 million in debt.

Joined at a press conference by Senate President Stephen Sweeney and Atlantic City Mayor Don Guardian, Christie said, “It’s beyond time that the city government displays the leadership and the tough decision making that’s essential to stabilize its finances and to provide services in the long run – not only to its businesses but to its residents as well.”

The city closed 4 of its 12 casinos in 2014 and had a decline of nearly 65 percent of its property tax base, which Christie said is a “challenge that no other city has endured in as short a time frame.” Additionally, the city has experienced a 50 percent increase in outstanding debt over the past five years.

In January 2015, Christie appointed an emergency manager to assess the city’s financial situation. The report, issued on January 15^th, revealed “a structural deficit of over $100 million in 2015 and hundreds of millions more over the next few years,” Christie said. Ultimately, the city could run out of money by the spring, according to the report.

“The bottom line is Atlantic City’s municipal finances are now the greatest threat to the city’s well-being,” Christie continued. “To eliminate the remaining forecasted deficits and to bring its budget into structural balance means making tough choices for everybody.”

The proposed plan, which according to Christie, “should be no longer than five years,” will include: Restructuring the municipal debt; privatizing municipal services or selling or leasing city-owned assets or services; amending or terminating any municipal contracts, including collective bargaining agreements; dissolving or transferring any municipal board, authority, department or commission; and consolidating or sharing municipal services with the county or other municipalities.

“I don’t think there is any other choice,” James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University told New Jersey Business. “Atlantic City is in an extraordinarily deep hole and it is not going to extract itself from that hole without help. And, essentially, there were two choices – to declare bankruptcy or have the state ‘take control,’ or ‘partner’ with it. So, in essence, the state will make many of the decisions in Atlantic City.”

Joel Naroff, president of Naroff Economic Advisors and chief economist for the New Jersey Business & Industry Association, says that right now, it is unclear if the takeover will be successful, because, “the problem that the city faces is not just a financial issue, but an economic issue as well. The Atlantic City economy has to go through a transition, especially with Northern New Jersey casinos coming into the fray and everything is not clear cut yet. So, it is a balance between the two.”

Christie hopes that his plan will be introduced and passed in February. However, the takeover must be approved by the State Legislature. Although Senate President Sweeney is behind the plan, he said the Senate committee would consider the bill. The Assembly has to approve it as well.

“Let’s make no mistake about this,” Christie said. “The urgency of the city’s current financial predicament cannot be understated. We will move swiftly to pass this comprehensive legislation and I will sign it so we can get on with Atlantic City’s next and most important phase of the restructuring.”