New Jersey Senate President Stephen Sweeney said Monday that he would submit state legislation to prop up Atlantic City financially.
The city has been hit by declining gambling revenues, which has led to successful property tax appeals by the city's casinos. In July Moody's Investor's Service downgraded the city's general obligation bond rating to Ba1. In September Standard & Poor's downgraded the GO Rating to BBB-plus from A-minus.
Sweeney said the city was in an "emergency fiscal crisis."
"This is a plan to protect Atlantic City from bankruptcy and position the city for future economic growth," Sweeney said. "With four casinos already closed and one likely to close by the end of the year, Atlantic City is facing unprecedented financial challenges. We must take immediate action to stabilize the existing workforce, the casinos and the entire community — before we can move forward to help Atlantic City chart out its new sustainable future."
Sweeney's legislation will switch the casinos from making property tax payments to making payments in lieu of taxes for two years in the amount of $150 million each year.
After the first two years, the casinos would make payments indexed on gross gaming revenues. Sweeney said this approach would stabilize the city's revenues.
The plan would also redirect revenue from the city's Investment Alternative Tax to use to pay for Atlantic City's debt. Currently, this money is used for economic development programs. This should generate $25 million to $30 million annually.
Furthermore, in the plan the state would force reductions in the city's administrative and education costs. Sweeney anticipates that the state would cut $72 million from 2015's spending.
Finally, to assure reasonable benefits for Atlantic City's workers, the city's casinos would be required to pay for health care and retirement benefits for their workers.
Atlantic City's tax base was $20.5 billion in 2010, according to Atlantic City mayor Don Guardian. It is expected to shrink to $9 billion in 2015 and eventually settle at around $7 billion later in the decade.
New Jersey Sen. Jim Whelan and Assemblyman Vince Mazzeo, both of whom represent Atlantic City, endorsed Sweeney's proposal Monday.
As of Dec. 31, 2013, Atlantic City had $261 million in debt, according to Atlantic City director of revenue and finance Michael Stinson.
