New Jersey’s chief executive, Chris Christie, is endorsing a state intervention into the financial affairs of Atlantic City. This marks a pivotal moment in the city’s battle for economic recovery. The strategy would grant the state authority over the city’s fiscal matters for half a decade.
This proposition has garnered the support of influential figures such as Senate Leader Steve Sweeney and City Manager Don Guardian, with the City Council having already given their approval earlier this week. Although the state already possesses some influence over the city’s budget, personnel decisions, and other monetary issues, this updated accord would significantly expand their control. Governor Christie aims to have this arrangement finalized by the second month of the year. It would encompass the power to reorganize the city’s substantial debt, renegotiate or nullify existing agreements, potentially even shutter municipal departments, and liquidate city holdings. These are all considered radical yet essential steps to address the escalating debt emergency.
Atlantic City’s economic troubles are primarily attributed to the downturn of its gambling sector. In the preceding ten years, income from casinos has been halved, dropping sharply from $5.2 billion to $2.6 billion. Worsening the situation, four casinos permanently ceased operations in 2014, resulting in the loss of hundreds of millions in tax income for the city. Atlantic City is currently burdened with $2.4 billion in debt and faces a potential $1.6 billion tax appeal obligation to the Borgata casino. Forecasts indicate the city confronting a budget shortfall exceeding $300 million over the next five years.
Income in Atlantic City has been faltering, primarily because of rivalry from nearby states. Although declaring bankruptcy is still a possibility, it’s crucial to remember that Governor Christie firmly recommended against it.
Those against bankruptcy contend that it would frighten away prospective investors over time. Yet, with agencies already lowering the city’s credit score to CCC-, deemed non-investment grade, a bankruptcy declaration might not substantially alter the situation currently.
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