New Jersey takes over debt-ridden Atlantic City government

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Timothy Cunningham, head of the finance board, will oversee the city, unless he appoints someone else to do it. He said one of the first priorities is to determine the way the state will interact with the local government. He could not immediately say what powers the mayor and City Council would retain.

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Mayor Don Guardian said the city may challenge the takeover in court, but would give the state a chance to lay out its vision of the new working relationship first.

The takeover occurred a week after the state Community Affairs Department rejected a proposed financial turnaround plan that would have seen the city lay off 100 workers, cut spending and sell its largest tract of vacant land to its water utility, keeping both in private hands.

The state said that plan did not provide sufficient financial stability for a city already heavily dependent on state aid.

The city’s financial strife is largely due to the decline of gambling. Atlantic City has seen five of its 12 casinos close since 2014, taxes have more than doubled over the last six years, and the city’s base of taxable property has declined by two-thirds in recent years.

In 2006, Atlantic City’s casinos took in $5.2 billion; last year that had fallen to $2.56 billion. When times were good and casino money was flowing, that was enough to support the city’s spending. But now, not even major cuts are enough to ward off a takeover.

Cunningham said the city’s water utility, which it refused to privatize, will be a major part of the solution to the city’s financial woes. But he stopped short of endorsing its sale.

The takeover can last for five years, unless the city makes sufficient progress on its finances before then.

“It’s an incredible responsibility, one that I’ve lost sleep over the last few weeks,” Cunningham said. “I’m sure I’m going to lose sleep tonight.”

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Follow Wayne Parry at http://twitter.com/WayneParryAC

Wayne Parry, The Associated Press