Atlantic City government’s time has run out and the state of New Jersey will now move to take over the city’s finances and much of its operations.
New Jersey’s Local Finance Board voted, 5-0 last week to grant its director, Timothy Cunningham, control over the city’s governing powers. The move comes after the State Department of Community Affairs rejected a five-year financial plan proposed by the city to solve its fiscal problems. The plan was the city’s last chance to stave off the takeover, which is part of a series of rescue bills passed in Trenton for the city earlier this year.
City Mayor Donald Guardian called the decision “devastating,” according to the Philadelphia Inquirer.
Cunningham had recused himself from the vote due to the power it would give him over the city and said he may appoint a designee to handle day-to-day operations, according to the paper.
“I’m still absorbing the magnitude of the responsibility that’s been leveled upon me today,” Cunningham, told reporters after the meeting.
Cunningham is also the director of the Division of Local Government Services, part of the state’s Department of Community Affairs. He said Atlantic City’s problems had kept him up nights, but did not give specifics on how he would proceed, according to the Inquirer.
Cunningham did say he wants to work with the city’s council before figuring out other methods of “operationalizing” the state’s powers.
City officials held a private meeting with Cunningham saying they had been told to continue with “business as usual.” They said they would wait and see before deciding whether to file a court appeal to try to block the takeover, the Inquirer reported.
Guardian and city officials have said they will consider legal action to oppose the takeover. Guardian has said groups like the American Civil Liberties Union, the National Association for the Advancement of Colored People and the League of Municipalities may join the city in opposing the move.
Under the rescue package, the state can run Atlantic City for up to five years. The state now has the power to hire and fire personnel, sell the city’s assets—including its Municipal Utilities Authority—veto City Council minutes, eliminate departments, and nullify union contracts. Cunningham now also has the authority to declare bankruptcy for the city.
The board also approved Atlantic City’s 2016 budget, but increased the city’s tax rate.
Guardian, however, said that the additional tax burden on residents would result in its citizens “walking away from their homes” and facing foreclosure, according to the Inquirer.
Guardian also said he thinks the takeover stems from moves by state officials to sell the city’s independent MUA, which is being sought by at least two private companies that have strong political connections in the state. The city has tried to retain control of the self-sustaining MUA in hopes of controlling water rates for citizens.
Lena Smith, an activist with Food and Water Watch, also raised the issue of a politically connected takeover of the MUA.
“The takeover of Atlantic City is about denying the people a voice in their own future, and the likely handover of a precious asset—the city’s water system—to private corporations close to Gov. Christie, Senate President Steve Sweeney and political power broker George Norcross,” she said in a statement.
The city has been facing major fiscal problems since casino gaming began to decline in the resort. Five casinos have closed since 2014 and several other have won major appeals on their tax payments and the city is now facing an about $100 million budget shortfall and about $500 million in debt it can’t currently pay back.
Meanwhile, the leading Democrat candidate to replace Christie when he leaves office in 2017, Phil Murphy (l.), says he would withdraw any state oversight of Atlantic City if he is elected. Murphy says the Atlantic City plan should have been given a chance to work.
“You have to find a better solution,” he told the AP. “As opposed to bigfooting the community, I’d be working with the community.”
Murphy, a former Goldman Sachs executive, like former Governor Jon Corzine, has managed to clear the field in his march to the governor’s mansion. Senate President Steve Sweeney and Jersey City Major Steven Fulop both unexpected withdrew earlier this year.
Pointing to the dismal record of the state in taking over cities and city services, Murphy said the Christie plan is a loser.
“Show me the evidence where it’s been successful and where the people of the community have benefited,” he said. “I don’t see the evidence.”
