Atlantic City has a little more time than it thought to meet a legislative requirement to develop a plan to fix its finances as the state officially informed the city that the deadline for the plan is November 3.
That deadline still falls before Election Day—November 8—and could put the city’s financial woes back into the headlines just as state voters will decide a referendum to allow new casino construction outside the resort for the first time.
Governor Chris Christie and other state politicians have said they don’t expect the city to come up with an acceptable fiscal plan by the deadline, and expect that the state will then move to take over the city’s finances. Christie had chided the city that “the clock was ticking,” but it actually wasn’t until last week.
Christie, however, has also said that the long battle in Trenton that culminated in a new rescue plan had probably hurt the referendum plan due to months of negative headlines about the city, which still has a monopoly on casino gaming in the state.
The referendum would allow two casinos to be built in the northern part of the state. The referendum does not specify locations for the project, but projects proposed for the New Jersey Meadowlands racetrack and another in Jersey City are considered the frontrunners.
Under the rescue plan adopted in Trenton, the city has 150 days to submit a plan. The legislation requires the city to submit a balanced budget for 2017 and a five-year plan to deal with its massive debt. In the meantime the plan releases some state and casino aide to the city and allows for some state loans.
Still, the city has to plug an about $44 million hole in its budget and deal with more than $550 million in debt it can’t currently pay back.
The notification of the deadline came from the state division of Local Government Services. Under the rescue plan, if the city fails to come up with a plan approved by the state, Trenton can then move to takeover city finances including the ability to sell city assets, break union contracts and assume major decision making powers of the city’s government.
Meanwhile, the rescue plan bill had another effect as Ed Sasdelli, the city’s already state-appointed fiscal monitor resigned his post, though he will continue through June.
Sasdelli has helped manage city finances for five years, but told The Press of Atlantic City that with the new challenges in the state takeover bill, the city needs a full-time fiscal manager. Sasdelli has been working part time and can’t take the fulltime job as he receives a public pension.
“I think that’s going to require much more than 18 hours a week from the state monitor,” Sasdelli told the paper. “Because of my pension situation, I can’t give that amount of time.”
Sasdelli was previously a township manager in Hamilton, Evesham and Franklin townships, according to the Press. Sasdelli said that when he started the job in February 2011, it was limited to helping the city with its budget and finances.
The city has operated with a fiscal monitor and an emergency manager appointed by Christie, but still faced bankruptcy as its ratable base has fallen by more than half since 2009.
The city also got some bad news from Wall Street as S&P Global Ratings issued a report saying they don’t feel the state’s rescue legislation will keep Atlantic City’s government from failing.
“The long-term prospects of a full and complete recovery of the city remain elusive absent a credible plan to restore fiscal solvency,” wrote analysts Timothy W. Little and Jane H. Ridley. “Despite aid received by the city, it is our opinion that some form of debt restructuring or debt impairment is highly likely unless a credible recovery plan that protects the city’s promise to bondholders is produced.”
The report acknowledged that the bill gives the city cash to operate throughout 2016, but said that will not be enough to fix the resort’s finances.
“We remain guarded regarding the city’s long-term financial recovery until a fiscal recovery plan is put forward that does not involve bonded debt restructuring,” the statement said. “The city continues to operate with no resolution on how to address its significant outstanding unfunded tax appeals, other off-balance-sheet liabilities, or a credible plan to eliminate its structural imbalance.”
The agency also said it wouldn’t upgrade the city’s bond rating leaving it at its current CC-negative junk rating.
The report also noted that Trenton’s long, contentious battle over the rescue plan hurt the state’s reputation and said the state’s support system for municipalities is no longer proven to restore fiscal stability in times of extreme stress.
In a related matter, the city announced it will auction off the 100-acre site of its former municipal airport along with 120 other properties in July in an attempt to raise cash. The site, known as Bader Field, does not have a minimum bid attached.
