ATLANTIC CITY — On the verge of bankruptcy just two years ago, the city’s 2018 budget represents progress toward a more secure financial future.
Timothy Cunningham, the state’s Local Government Services Director, said Atlantic City is in a “markedly better” position today than it was in 2016 when then-Gov. Chris Christie signed legislation removing local control of the city’s finances.
“I’m pretty confident that the city is well on its way toward a greater level of financial sustainability,” Cunningham said Friday. “However, local leaders, and frankly the leaders of the county and the state, also have to remain diligent that this sustainability comes as the result of hard work and hard decisions. And that’s going to be true for upcoming budget years.”
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The city’s total budget decreased from $243 million in 2016 to $225 million this year as introduced. City Council unanimously approved introducing Mayor Frank Gilliam’s budget June 13 and will hold a public hearing and final vote July 18.
Earlier this year, council demonstrated its ability to make the hard decisions Cunningham referred to when the governing body voted to issue $55 million in bonds to pay down deferred pension and debt obligations from 2015. The state Department of Community Affairs announced the sale of $49 million of those bonds less than two months later.
Without the bond sale, the city would have had to raise property taxes in 2018 by more than $700 on the average assessed home of $140,000, state officials said.
The result has been two consecutive years of property owners in the city not seeing an increase in the municipal portion of their tax bills. In 2017, there was a slight tax decrease, something the city had not experienced in nearly a decade. The 2018 budget maintains a flat tax rate of $1.79 per $100,000 of assessed value.
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“A lot of hard work and sweat has gone into this budget that we have,” Gilliam said at a press conference at City Hall the day before formal introduction.
Following the press conference, the DCA issued a statement that said the announcement of a flat budget for 2018 demonstrated that “city officials are showing an understanding of the issues that Atlantic City faces and an emerging ability to find ways to solve them without resorting to property-tax increases. This is a solid budget, and the city staff who worked diligently to draft it should be proud of their efforts.”
The overall amount of state aid given to the city has also declined. Specifically, the amount of Transitional Aid, which is state funding given to financially stressed municipalities, has been nearly eliminated. The city received $37 million in Transitional Aid in 2016 and $13 million in 2017. This year, that figure was $3.9 million.
Council President Marty Small Sr. said the initial offer from the state was $1.9 million in Transitional Aid for this year, which would have resulted in a tax increase.
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Gilliam and Small, who were both vocal opponents of the 2016 takeover, credited state employees with working collaboratively with city officials to put together a budget that maintained service levels without adversely impacting property owners.
Also assisting the city’s coffers is a $7 million increase from payments in lieu of taxes from the seven operating casinos due to a lucrative 2017 for the industry that saw revenues increase over the prior year by 22.5 percent.
However, the city is not out of the woods completely. Atlantic City is still nearly $450 million in debt. Tax appeals from casinos resulted in a decreased ratable base. Several properties throughout the city pay significantly less in taxes than their assessed values call for as a result of PILOT agreements.
And the state can still maintain control of the city for at least another three years.
But officials see the light at the end of the tunnel. Small, also chairman of the Revenue and Finance Committee, said city officials would continue looking for ways to raise revenue and balance the budget.
“Remember, we’ve come a long way in two years,” he said.