Budget of Atlantic City in New Jersey to shrink 11 percent, mayor says

Reuters News
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Posted: Feb 18, 2015 8:02 PM

By Hilary Russ

ATLANTIC CITY, N.J. (Reuters) - The mayor of Atlantic City on Wednesday provided a glimpse of his budget plans for 2015, saying he will propose a $235 million spending plan for this year, down 11 percent from 2014.

Mayor Don Guardian again called for more state aid, saying that the cash-strapped gambling hub has not received the same share as other distressed New Jersey cities.

"Atlantic City doesn't have their hand out saying 'give me something because we can't do it,'" Guardian said during his state of the city address to the city council. "We provided $9 billion of gaming tax alone to the state of New Jersey over the last 35 years. Give us the help while we're down and out."

Even as four casinos shut last year, the city produced $700 million in taxes for the state. It received 7 percent of its 2014 budget from state aid - compared with Newark at 18 percent and Camden at 66 percent, he said.

The city's fortunes have dwindled as its casino industry has suffered from gambling competition in neighboring states.

That caused the city's property tax base to tumble. It is expected to shrink to $7.35 billion, Guardian said on Wednesday, down by almost two-thirds from its $20.5 billion assessed value for 2010.

To make up the difference, the property tax rate has skyrocketed. Guardian said the city could not withstand another tax hike and had no intention of raising rates again in 2015.

Governor Chris Christie last month appointed an emergency management team with ties to Detroit's historic bankruptcy. They have until late March to review the city's finances and propose solutions.

Wall Street credit rating agencies are concerned that the appointment opens the door to a bankruptcy filing and debt restructuring.

Atlantic City recently took out $12 million of short-term notes, and it has a March deadline to repay a separate $40 million to the state.

To city hopes to pay off both of those obligations with a $52 million borrowing through the state's Qualified Bond Act program, Guardian told reporters after his presentation.

The city wanted to use that program last year but delayed the borrowing amid investor concerns about the city's finances.

Guardian is also reducing staffing through attrition, with the city on track to have cut 200 positions by June. The city council agreed to give up their city cars on Wednesday.

Guardian will present his full budget proposal in the next couple months.

(This story was corrected to state in paragraph 7 that Guardian said there is no intention to raise tax rates in 2015, instead of that he vowed not to raise rates)

(Reporting by Hilary Russ; Editing by Lisa Shumaker)