New Jersey Governor Chris Christie has endorsed a proposal that would grant the state government authority over Atlantic City’s finances for the upcoming five years. This marks a pivotal moment for the struggling municipality.
Earlier this week, the Atlantic City Council approved a resolution backing the new plan. Encouragingly, influential figures such as New Jersey Senate President Steve Sweeney and Atlantic City Mayor Don Guardian have also expressed their support.
Although the state already possesses some influence over the city’s budget, employment, and other financial aspects, this new arrangement would significantly expand their control. Governor Christie aims to finalize this agreement by February. The deal would encompass stringent measures, including the restructuring of city debt, renegotiation of union agreements, potential closure of city departments, and even the sale of city assets. These are all radical actions, but they are being contemplated to address the city’s substantial debt burden.
The financial instability in Atlantic City is primarily attributed to the decline of its casino sector. In the past ten years, casino revenue has plummeted from $5.2 billion to $2.6 billion. Exacerbating the situation, four casinos permanently ceased operations in 2014, resulting in the loss of hundreds of millions in tax revenue for the city. Atlantic City is currently grappling with $2.4 billion in debt and facing a potential $160 million payment to the Borgata casino due to an ongoing tax appeal lawsuit. Furthermore, projections indicate that the city’s debt could increase by an additional $3 billion within the next five years.
The Jersey Shore’s gambling hub has hit a rough patch, with rival gaming venues sprouting up in nearby states like weeds. While Governor Christie has firmly rejected declaring insolvency, let’s face it, it’s becoming a very real possibility. Some argue it’ll spook potential investors down the line, but with a credit score already in the toilet (think CCC- territory), what’s the worst that could happen?
