New Jersey can cut Atlantic City’s Fire Department by 15 members early next year as a cost-saving measure under the state’s Municipal Stabilization and Recovery Act, Superior Court Judge Julio Mendez ruled Wednesday.

The 13-page ruling lifts the restriction that any reduction in force must occur through retirements or attrition. Mendez, who previously ruled against the state’s plan for 50 layoffs in late August, said no cuts can take place before Feb. 1. The legal showdown was the first test under the Recovery Act takeover powers led by designee Jeffrey Chiesa that enables the state to alter outstanding municipal contracts.

Atlantic City skyline
Atlantic City skyline Bloomberg News

"Upon careful consideration of the facts and legal arguments, the court is of the view that the plan and timeline for immediate reductions is problematic but it’s not impermissible by the Recovery Act," the decision said. "The court will not restrict the Designee from establishing a plan to reduce the size of the ACFD from the current level to 195 to 180."

The state initially aimed for 100 firefighter cuts, before Judge Mendez issued a temporary restraining order in February. A February Moody’s Investors Service report said that the firefighters’ court fight could pave the way for other unions to challenge staffing cuts.

"Since the State takeover began, I have been fighting for our residents to make sure our fire department continues to be at nationally accepted fire standards," Atlantic City Mayor Donald Guardian said in a statement Wednesday following the ruling. "I am disappointed that the State has pushed forward this motion knowing that the State Senate, Assembly, and the Governor all passed an early retirement bill for just this reason. We could have easily gotten to 180 fighters through these incentives."

The New Jersey Department of Community Affairs is disappointed at "the court's insistence on requiring an artificially and unnecessarily high number of firefighters," said spokeswoman Lisa Ryan.

"While the decision to allow a modest reduction in firefighters on February 1, 2018 will provide some budget relief, the City will still be forced to make additional and significant reductions to fire salaries in order to afford paying for 180 firefighters," she said. "The City will not visit this burden on the residents of Atlantic City who already pay far too much in taxes."
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Atlantic City had $224 million in bonded debt, according to its latest debt statement. The distressed city, which has deep junk-level credit ratings of CC by S&P Global Ratings and Caa3 by Moody’s Investors Service, has issued $138 million in bonds this year through New Jersey’s Municipal Qualified Bond Act program to address to finance casino property tax appeal settlements.

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