ATLANTIC CITY -- A lot of “unpleasant” actions will likely be needed to fix this city’s finances, a firm advising the city told residents Tuesday.
Michael Nadol, of PFM Group, led the city’s third public meeting on its five-year fiscal plan to avoid a state takeover. Nadol introduced the firm to the public, described the city’s dire financial situation and outlined some steps that could help the city achieve fiscal stability.
“A lot of the actions that will likely be necessary will be unpleasant,” Nadol said. “And they haven’t happened yet for a reason. Because absent the kind of challenge the city faces, (it) wouldn’t want to see them happen.”
A city resident, Doreen Heller, 66, asked what kinds of actions that could mean. Nadol said he couldn’t speak to what the final outcomes will be, but said it could mean changes in services, a city workforce reduction, changes in employee compensation or tax increases
“Can we afford to pay you?” quipped Heller, who said she pays $17,000 in taxes.
PFM can bill the city no more than $225,000 for a year’s work, according to its contract with the city.
PFM works around the country and develops financial plans for governments facing budgetary stress, according to a statement from the Mayor’s Office. It is currently the state-appointed overseer for Pittsburgh and helped Philadelphia recover from junk bond credit ratings in the early 1990s, the statement said.
Nadol said the firm is one month into its work and is conducting interviews, reviewing data and developing five-year financial projections for the city. It will do “quantitative analysis” for the city and help inform city officials’ decisions. The firm has office space in the city and about five firm members are dedicating “half or more” of their time on Atlantic City, Nadol said.
The city has until Nov. 3 to submit the plan to the state. The plan’s rejection would result in a state takeover of the city’s finances and major decision-making powers for five years.
The city has a roughly $100 million budget deficit before state aid. It also owes $228 million in bonds issued to cover tax appeals and an additional $165 million in tax refunds to Borgata Hotel Casino & Spa and MGM Mirage, according to Moody’s.
PFM is not the first firm to review the city’s dire finances. Most recently, Ernst & Young billed the state $2.6 million for its work in the city.
But this time, the firm works for the city, not the state. After the meeting, Mayor Don Guardian recalled a time the city asked Ernst & Young for financial planning advice.
“They said ‘We can’t share that with you. We work for the state of New Jersey. Not for you,"" Guardian said