Atlantic City under state control for 3 more years

TAGs: Atlantic City, MSRA, New Jersey

The state of New Jersey will continue overseeing the fiscal recovery of Atlantic City until 2021, the Office of the Governor announced.

Gov. Phil Murphy has unveiled the report ‘Building a foundation for a shared prosperity,’ submitted to his office by Special Counsel James E. Johnson, which outlines various proposals to be undertaken before control of the city is given back to the local government.

“Atlantic City has a number of challenges that will only be resolved with significant direction from and partnership with the State,” the report read.

Atlantic City under state control for another three yearsIn May 2016, when Chris Christie was still governor, the Municipal Stabilization and Recovery Act (MSRA) was passed by the state legislature to remedy the bankruptcy faced by Atlantic City, whose casinos’ gross gaming revenue (GGR) had declined by 7.5% annually from 2006 to 2014, with some casinos closing down. With the legislation, a five-year period was given for the state’s takeover of local powers.

“The strong State oversight established by MSRA should continue until the earlier of two conditions: the expiration of the State’s authority in the City pursuant to the MSRA; or municipal capacity is on strong footing and the City’s reliance on State transitional aid has been substantially reduced if not eliminated,” the report read.

According to news outlet, Murphy, who had campaigned for governor promising to end the state takeover, will push through with the five-year time frame after all. In his view, however, the state was acting more as a “partner” rather than “big-footing” the city.

“Without a doubt, positive things are happening in Atlantic City. However, if we want to see today’s progress endure long into the future, we have to tackle longstanding challenges such as poverty, unemployment, affordable housing and public health. Most importantly, we must invest in the people who live and work here,” Murphy said.

Murphy’s press release also quoted Atlantic City Mayor Frank Gilliam as acquiescent to the ongoing recovery program. “As the mayor of this great city, I have waited patiently for this day. The citizens of Atlantic City deserve to have their local elected officials control their destiny. I am very optimistic that this is a huge step in the right direction for Atlantic City and its future,” Gilliam said.

The state counsel’s report points out that with the MSRA in effect, the municipal budget had shrunk 15%, while property taxes have not increased. However, school and county tax rates have gone up 10.7% and 15.4% respectively, as a balanced budget was passed for 2018.

The report recommended that the New Jersey government “form a task force to review recent casino closings to determine whether changes can be made to the regulatory framework, and suggests that the City expand efforts to promote itself as a destination.”

The report cited the entry of other states as well as Indian gaming into the market as having a big effect on GGR the past decade. “The Review Team is aware of no forecast that anticipates that Atlantic City will recover the market share it enjoyed until 2006 and the jobs created during the recent upswing are likely to be somewhat different from those created earlier… [T]he introduction of internet gaming in recent years has been a significant factor in the recent increase in casino revenue,” the report read.


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