For many years we’ve urged Atlantic City officials to budget responsibly. By the fall of 2015, we gave up and put state leaders on notice that they were the last hope for fiscal sanity in the essentially bankrupt city.
“Atlantic City officials (and the city residents who elect them) clearly aren’t going to take the steps needed to bring their spending in line with their much-diminished (but still high) revenue,” we said then.
Now, after overcoming a lot of misguided opposition, state officials in charge of the city’s finances have delivered on that core mission.
When the day finally came last week and Atlantic City introduced a budget that cut spending $35 million from the prior year and even reduced the local tax rate, there was little celebration. State officials led by former U.S. Sen. Jeffrey Chiesa had made the hard and unavoidable choices necessary to keep the city solvent. There was no other way, so in the end it was widely expected.
That inevitability hadn’t stopped local and even some state officials from trying to keep city spending at an unsustainable level. They attempted to stop the state taking control of Atlantic City finances and, failing that, managed to stall the effort. They desperately cast about for new revenue sources, even ones that would undermine the city’s economy further.
Mayor Don Guardian, who had backed out of the original state takeover deal, a year ago was still trying to prevent the state from reducing a city payroll bloated by the decades-long casino tax windfall. He was helped by Assembly Speaker Vincent Prieto, who shared his desire to put government workers well ahead of citizens and taxpayers in the painful reorganization of city finances.
With the help of powerful public-employee unions, they managed to force a five-month delay in fixing city finances, ostensibly to give the city time to come up with its own responsible budget. Instead, the mayor and council proposed adding hundreds of millions to the city’s already unsustainable $500 million in debt — and giving it big increases in state aid.
Even after the state finally got control of city finances, Prieto tried to jack up the city’s room tax to keep channeling money to his union backers — which would have pushed Atlantic City’s room tax well above those of convention competitors Philadelphia, Boston and Baltimore.
It didn’t take long for Chiesa’s team to deliver a significant benefit to the city. In February, he announced that a renegotiation of the Borgata Hotel Casino’s tax-appeal refund had saved $93 million.
Businesses and investors started to act like Atlantic City was an opportunity again, instead of a potential liability. Projects were announced and empty casino hotels were bought, culminating in Hard Rock International’s decision open a casino hotel on the Boardwalk.
The $206 million budget presented by Atlantic City officials at Chiesa’s direction cuts the municipal tax rate 5 percent — after a 96 percent increase since 2010 as the city sought to keep spending even as its tax base dropped by two-thirds.
Some aspects of the budget are being challenged, and there still is much to be done to repair the soundness of city finances, of course. But there’s no question that state officials are doing what’s long been needed in Atlantic City government.
Making the tough choices that assure a better future is often a thankless job, but we’re grateful for the state’s work and the residents of the greater Atlantic City area should be, too.