New Jersey's Local Finance Board has approved Atlantic City's 2015 budget plan to plug a $101 million shortfall.
The $262 million budget approved unanimously by the local finance board Tuesday contains no tax increase thanks largely to state grants and transitional aid. The fiscal plan also budgets a $33.5 million "Casino Redirected Anticipated Payment" and is aided by $127.7 million in miscellaneous revenue, which is more than double the $62 million in the 2014 budget. The city is also deferring $39 million in pension and health payments to the state.
"At the beginning of the year, we were facing a $101 million dollar deficit and experts told us that we could not balance our budget without a huge tax increase," said Atlantic City Mayor Donald Guardian in a statement. "This is truly a new beginning for Atlantic City, and our best days are still ahead of us."
The Atlantic City 2015 budget passage came with just 100 days remaining in the year and Revenue Director Michael Stinson said work will begin immediately on devising a 2016 fiscal plan. He said Atlantic City Emergency Manager Kevin Lavin is expected to issue his second report this week with recommendations to improve city finances. His first report released March 22 included suggestions for bondholders such as extending maturities and exploring refinancing opportunities that may reduce interest rates.
Moody's Investors Service analyst Josellyn Yousef said the budget plan "resolves the city's budget crisis for this fiscal year", but cautions that challenges remain for next year and beyond.
"In FY 2016, Atlantic City will have a structural deficit of approximately $90 million, assuming no additional payment deferrals and the one-time revenues it received this year do not recur," said Yousef. "Additionally, struggling casinos such as Trump Taj Mahal and Caesars are an ongoing risk because the city would lose additional property tax revenues if they scale back or close."
Moody's downgraded Atlantic City six notches to Caa1 in January after Gov. Chris Christie placed it under emergency manager control. Standard & Poor's slashed the city three notches to B from BB in early August because of uncertainty surrounding budget plans for 2015 and 2016. The gambling hub suffered four casino closures last year.