A new bill proposed in the New Jersey State Senate would allow financially distressed Atlantic City and other coastal municipalities to end costly lifeguard pensions.

The legislation sponsored by Senate President Steve Sweeney, D-Gloucester, and State Sen. Kevin O'Toole, R-Cedar Grove, would enable local governments with lifeguard pensions to either stop enrollment or end the program all together. Atlantic City, which is close to running out of cash, currently pays more than $1 million to its retired lifeguards each year, according to a draft of the bill. The city is among nine New Jersey seaside communities that have been required to provide lifeguard pensions under state law since the 1920s.

"This is a symptom of the financial practices that have contributed to the city's fiscal crisis," said Sweeney in a statement. "This legislation will give Atlantic City the clear authority to fix this problem by ending the practice."

Moody's Investors Service cut Atlantic City's junk-level bond rating two notches to Caa3 on April 4, citing default concerns. The ratings agency estimates that the city has a $102 million budget deficit along with more than $400 million in debt outstanding. The struggling gambling hub, which suffered four casino closures in 2014, implemented a 28-day pay period starting April 8 to avoid a default.

Atlantic City Mayor Donald Guardian expressed support for the bill. The first-term mayor has been against a state intervention plan proposed in the State Senate and has urged that instead the legislature solely pass a companion bill that would enable the city's eight remaining casinos to contribute payments in lieu of taxes for 10 years including $30 million collectively for 2016.

"I thank Senate President Sweeney for listening to these concerns and creating a bill that will allow us to end the lifeguard pension plan that we have been forced to pay by the State for several decades now," said Guardian. "We support its quick passage and will use it as one more tool to help bring down costs in Atlantic City."

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