An Oct. 10 court ruling allowing New Jersey to cut 15 Atlantic City firefighter positions provides “mildly credit positive” financial relief to the distressed gambling hub despite the reductions being far less than the state requested, according to Moody’s Investors Service.
The 15 fire department cuts will save Atlantic City $1.75 million in the 2018 fiscal year and equate to 0.8% of the city’s 2017 budget, according to Moody’s analyst Douglas Goldmacher in a report released Friday. New Jersey’s Department of Community Affairs, which has state oversight of Atlantic City’s finances, originally requested 100 fire department cuts before Atlantic County Superior Court Judge Julio Mendez issued a temporary restraining order in February. Mendez’s ruling last month prevents the 15 cuts from occurring until 60 days after a federal grant currently paying for the positions expires.
“Although a greater number would have constituted a greater success, any reduction is positive and the clear admission of the state’s authority to make cuts is of paramount importance,” said Goldmacher in his report. “The court estimates that the cost of maintaining those 15 positions would be $1.75 million in 2018. Although this is a small portion of the city's budget, given the city’s highly strained finances, this would be a major source of pressure”
The grant pays for roughly 79 positions and is expected to end this month meaning the 64 other jobs would be paid for by Atlantic City’s general fund. The positions are not expected to be eligible for elimination until February 2018.
Goldmacher noted that the ruling sends a mixed message in terms of the state’s power and authority over Atlantic City under the Municipal Stabilization and Recovery Act, which empowers New Jersey’s Local Finance Board to alter outstanding debt and municipal contracts. While some cuts were allowed, the decision says that the city must retain a minimum level of service with adequate time given prior to the position reductions taking effect.
“While the court clearly acknowledged the state's legal right to shrink the city’s headcount in an effort to reduce expenditures, it also clearly indicated that the power is not unlimited,” said Goldmacher. “This ruling, and its limitations, affects ongoing negotiations with other unions.”