New governor's move signals a shift in state's approach to Atlantic City

New Jersey Gov. Phil Murphy took a step toward moving Atlantic City back to local control by appointing a former Clinton administration official to lead a review of the state’s intervention efforts.

Murphy and New Jersey’s Department of Community Affairs announced Thursday that Jim Johnson, who was undersecretary for enforcement at Treasury under Bill Clinton, has been tapped as a special counsel focused on the debt-ridden gambling hub, which has been under a state takeover since November 2016. Johnson, a Democratic primary opponent of Murphy last year, will be tasked with conducting an “intensive review” of Atlantic City’s ongoing litigation in coordination with Attorney General Gurbir Grewal and providing recommendations that can lead to a return of local control.

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"Atlantic City is poised for a comeback, and I am sure that Jim's guidance will play a critical role in the growth and economic revitalization of the city," said Murphy in a statement. "Jim has years of governmental experience and knows how to work with tough budgets, traits that will serve him well in this role."

Johnson, who will be paid $1 per year for his work as counsel, said during last year’s Democratic primary campaign that he would end the state’s Atlantic City takeover if elected governor. In addition to his role at Treasury, Johnson was a former assistant U.S. attorney in the Southern District of New York. He was formerly a partner at Debevoise & Plimpton and is currently a fellow at the Brennan Center for Justice, a non-partisan public policy and law institute.

“This administration is committed to getting Atlantic City back on its feet, and we will do so by working with its leaders, not by stepping over them,” said Lt. Governor Sheila Y. Oliver, who is also DCA commissioner. “In leading our efforts in Atlantic City, Jim will play a vital role in restoring confidence in its finances and future, and will help position the city and its residents to thrive.”

The Murphy administration did not immediately reply to a request for comment about how the Johnson appointment impacts Jeffrey Chiesa, a former New Jersey attorney general and U.S. senator who was named as designee in November 2016 to lead the state’s Atlantic City recovery efforts. Former Gov. Chris Christie, a close ally of Chiesa, credited him late last year with forging settlements on owed casino property tax appeals and cutting the city’s 2017 budget by $56 million through public safety staff adjustments along with outsourcing certain municipal services.

Atlantic City nearly defaulted on its debt in late 2016 before the state intervention took effect. The cash-strapped city had $223.6 million in bonded debt outstanding, according to budget documents released last September. The city’s bond ratings are deep in junk territory at CCC-plus from S&P Global Ratings and Caa3 from Moody’s Investors Service.

The press office for new Atlantic City Mayor Frank Gilliam did not immediately respond to a request for comment on the Johnson hiring. Gilliam, a former city councilman, defeated incumbent Mayor Donald Guardian last November and was sworn in on Jan. 2.