- City officials have five months to devise a plan for stability
- Credit-rating companies want to see more certainty on plans
New Jersey Governor Chris Christie said he will sign two bills that pull Atlantic City from the brink of bankruptcy and give the troubled gambling hub about five months to right its finances -- a task that if unmet would result in an unprecedented state takeover.
The measures passed by the New Jersey legislature infuse the resort town with enough cash to pay bills and workers through October. Officials have until about then to craft a five-year plan to restore fiscal stability for a community where the tax base has tumbled by more than two thirds since 2010 as gaming competition increased in nearby states. If they fail, the city would fall under the control of the state, which could sell its assets and void or change labor contracts through expansive powers awarded by the legislation.
The Republican governor said during a visit to the Point Pleasant boardwalk that he plans to sign the legislation Friday, a local radio station reported. Christie spokesman Brian Murray confirmed his comments.
Under the agreement, the state would provide Atlantic City with a bridge loan. Some gambling proceeds that go toward marketing would flow to the city, which would also receive fixed payments from casinos instead of property taxes to prevent the assessment appeals that have strained its finances.
"Now the administration of Atlantic City can roll up their sleeves with their workforce, and I think we’re giving them an opportunity to again be the jewel of New Jersey,” said Assembly Speaker Vincent Prieto, a Democrat, in a statement after his chamber’s vote Thursday.
Atlantic City, which once had a monopoly on gambling on the East Coast, has been veering toward insolvency since a third of its parlors closed in 2014. To avert a shutdown of city services, the 39,000-resident community lengthened worker pay periods last month. Mayor Don Guardian warned the city could run out of money in June.
No New Jersey city has defaulted or entered court protection since the Great Depression. S&P Global Ratings said that even state intervention may not forestall a default or bondholder losses, and Moody’s Investors Service said a "high degree of uncertainty" remains for solving the city’s problems.