New Jersey rejects Atlantic City’s financial recovery plan, opens the door for state takeover

New Jersey officials have rejected a fiscal recovery plan proposed by Atlantic City officials, opening the door for a complete state takeover of the financially-struggling resort town.

Now the state Department of Community Affairs will decide whether to assume the powers of Atlantic City’s government in an attempt to repair the city’s finances.

“I would have much preferred to leave management of the City’s recovery in the hands of its municipal officials,” said Charles Richman, commissioner of the state Department of Community Affairs, in a press release late Tuesday. “However, I am constrained by the plan the City has placed before me.”

Republican Gov. Chris Christie and Democrats in the state Legislature agreed on a takeover framework earlier this year when Atlantic City was running out of money. They allowed it to submit a proposal for financial recovery before deciding whether to assume the functions of local government.

Tuesday’s rejection of that proposal means that DCA will now decide whether to take over Atlantic City.

The announcement follows months of reluctant cooperation from Republican Mayor Don Guardian and members of Atlantic City Council, who drafted the recovery plan while continuing to publicly oppose the possibility of a state takeover.

“The Department of Community Affairs had the opportunity to ask us any questions they had over the past five days but did not do so,” said Guardian and city council president Marty Small in a joint statement. “Instead, they used their own interpretation based on their own opinions to come to inaccurate conclusions.”

Should a takeover happen, the state would have the power to eliminate public worker contracts, sell city assets, veto decisions made by city council, and more in an effort to close Atlantic City’s $100 million budget deficit and pay off $500 million in debt.

The city has watched its tax base shrink by more than two thirds since the beginning of the decade, thanks in part to the implosion of the city’s gambling industry.

Five of the city’s 12 casinos have closed in the past three years, putting thousands of people out of work and creating a mortgage foreclosure crisis in South Jersey.

Democratic Assembly Speaker Vincent Prieto, who initially opposed a takeover bill because it allowed the state to break public worker contracts but later accepted a revised version, cautioned that a state takeover would affect residents across New Jersey.

“Taxpayers better now beware,” said Prieto in a statement. “State takeovers of school districts have been disastrous. The [Christie] administration needs to immediately detail whether a takeover would cost taxpayer money and how much.”