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Clock Winds Down On Atlantic City’s Efforts to Deliver Five-Year Plan

Wednesday, October 19, 2016   (0 Comments)
Share | 10/19/16

Only two-and-a-half weeks away from a November 3 deadline to come up with a five-year plan to shore up its finances and avoid a state takeover, Atlantic City and its representatives are still struggling to meet the demands of state officials in Trenton, who say the beleaguered seaside city isn’t doing enough to balance its budget in the face of declining tax revenues. The most recent divergence between city and state officials came this week, when the former failed to submit a revised annual budget to the state’s Local Finance Board in time to meet a Monday deadline.

Tim Cunningham, director of the Department of Community Affairs’ Local Government Services, said that the state had received a “draft budget” from the city back in August, but that he took issue with the fiscal plan because it relied on too much state aid on not enough planned tax hikes. In the letter obtained by NJ Spotlight, he called those aspects of the budget “very troubling given the City’s precarious financial condition.”

Cunningham, in his letter, acknowledged that while “no elected official desires to increase taxes, it is irresponsible not to maintain the current levy let alone not increase the rate in a way that brings in additional revenue.” He also said that per the department’s requirements, the $37 million in new transitional aid that the city requested in its budget must come with “a tax increase of no less than the maximum permitted by the levy cap workbook or 6%, whichever is less.”

Now, the city is coming under fire from the state once again. In his letter, Cunningham said that the $37 million in transitional aid the city requested in the budget is "far more than the division has available to provide to the city or ever indicated that the city should expect to receive.” He said there is room for city to make additional cuts if it does not receive the full amount, and recommended that the city specify all those areas of potential savings. In 2015, the city received just $13 million in aid. Cunningham also said that the city's obligation to present a satisfactory 2016 budget "exists independent" of its task to come up with a longer-term funding plan. 

But Guardian contends that the city has followed the state’s directives, including the requirement that it raise taxes to qualify for state aid. In his letter, he asked the state “consider the major tax increases that the city has already borne,” which include a 50 percent hike over 2013 and 2014. He cited hiring reductions, construction and mercantile fee increases, and land sales as examples of changes to the city’s budget that will “set the City on a course to recovery without tax increases.” Overall, Guardian said the city anticipates millions of dollars in savings over the next several years, including $7.4 million in 2017, $12.7 million in 2018, $17 million in 2019, $17.3 million in 2020, and $18.5 million in 2021.

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