The New Jersey Department of Community Affairs wants Atlantic City to revise its 2 million municipal budget to include more tax increases.
The city has said no, and missed a DCA-imposed deadline to submit the revisions. The city argues that it has raised taxes more than 50 percent in recent years and residents can’t take any more.
Meanwhile, the clock is ticking on a November 3 deadline for the city the release a fiscal plan that will restore it to solvency. If the state doesn’t approve the plan, it will move to take over the city’s financing.
The dispute over the city’s budget highlights months of wrangling over the city’s finances as city officials try to hang on to control of their government.
In the budget dispute, the DCA told the city to submit a revised budget after state Local Government Services Director Tim Cunningham wrote that the “draft budget” he received in August relied too heavily on state aid without any planned tax increases.
City Mayor Donald Guardian quickly wrote back that the budget submitted to the state in August wasn’t a “draft,” but the official city budget introduced to city council. The city submitted a draft budget to the state in June, he said.
According to Bloomberg News, the $242 million budget relies on $106 million of state aid, and—according to Cunningham—would collect less tax revenue than received in fiscal 2015. Cunningham wrote that he sent these “fundamental concerns” to the city on Aug. 24, but received no response.
Guardian said a tax increase would be “devastating” for Atlantic City residents after the city increased taxes by 50 percent over 2013 and 2014.
All this comes about two weeks after the city essentially violated the terms of a $73 million state loan—though the state has so far not acted against the city—and just over two weeks before the city is due to submit its five-year fiscal stability plan.
Under a financial rescue plan for the city passed in Trenton, the city has to come up with a five year plan to restore its finances or the DCA will move to take control of all city finances.
Guardian issued a lengthy press release outlining several steps the city has taken to reduce its budget, including major reductions in personnel and equipment, privatizing several city services and instituting shared services agreements with other agencies. The city is also renegotiating union contracts and has introduced plans to sell its former municipal airport Bader Field for $110 million to the city’s Municipal Utilities Authority.
Guardian also said he expects to soon announce a tax settlement with the Borgata Hotel Casino & Spa. The city lost a series of tax appeals by Borgata and owes the casino about $150 million in tax refunds—a significant part of the city’s about $ 500 million debt.
He said the five-year plan will save about $73 million by 2021, and asked for unity with the state.
‘We have a plan that is weeks away from being finalized. It is carefully crafted, realistic, and achievable,” Guardian wrote. “Together let’s plan for the future.”
The DCA has not commented on the city missing the deadline for a revised budget.
