[toc]Atlantic City has long been a destination for gamblers on the East Coast, as well as the rest of the world. However, in recent years the seaside city has accumulated massive debt and teetered on the edge of bankruptcy.
On Nov. 9, in an effort to save Atlantic City from financial ruin, the state Local Finance Board voted 5-0 to approve Governor Chris Christie’s administration to begin a five-year takeover of the local government.
Who’s in charge and what powers do they possess?
Tim Cunningham, the director of Local Government Services, has appointed former State Attorney General and former US Senator Jeffrey Chiesa to lead the state’s efforts in turning Atlantic City’s finances around.
As the lead on the state takeover, Chiesa will have the power to open and renegotiate union contracts, as well as sell city assets. He will also have the ability to hire and fire workers, enter into shared service agreements, and restructure debt.
However, the state cannot file for bankruptcy on behalf of the city.
It is unclear what duties the mayor and city council will retain.
How will this impact New Jersey casinos?
The predominate reason Atlantic City is facing such a dire financial situation is the closing of five New Jersey casinos during the last three years. These closures are mainly due to new competition popping up in neighboring states, but regardless of the cause the city’s local taxes haven taken a massive hit.
Some people argue that the state takeover could lead to more gamblers staying away from Atlantic City casinos because of negative connotations. Decreases in player pools could, in turn, cause additional casino closures, but these arguments are only conjecture.
Although it is difficult to predict the long-term ramifications of a state takeover, it is unlikely casino goers will notice the shift in power.
“The casinos do not fall under the city management, so having the state come in to run the city should not impact their operation short-term,” Bob Ambrose, instructor of hospitality and gaming at Drexel University told the Press of Atlantic City. “A concern may be long-term. Their presence may offer an ongoing perception of instability. This is not good for investors long-term.”
The governing body working directly with casino operations is not the local government, but the Division of Gaming Enforcement, and the state takeover will have no impact on this relationship.
How will this affect NJ residents’ taxes?
Critics warn that the state, now attempting to fill a $100 million deficit in the city’s budget, is going to be looking for other ways to pay down the $500 million of debt. They worry that Atlantic City’s debt will shift away from the city and onto state taxpayers.
This would leave fewer statewide tax dollars for other programs.
However, experts agree that if the city goes bankrupt, the credit ratings of other municipalities across New Jersey would drop, causing the whole state to suffer.