The $225 million budget proposal Atlantic City Mayor Frank Gilliam unveiled Tuesday would keep property taxes flat for a second straight year and shows the city's continued progress, according to the state body that oversees the city.

The stable tax rate is aided by budget reductions, state aid assistance and savings achieved from a $49.2 million bond sale in April to finance pension and healthcare obligations from 2015.

The city did not provide a full breakdown of the budget slated to be voted on at Wednesday evening’s Atlantic City Council meeting, but Gilliam said it would include capital improvements, additional library funding and one-time $500 stipends for full-time municipal employees with salaries below $40,000.

The Borgata Hotel Casino & Spa, from left, The Water Club, The Golden Nugget Inc., and Harrah's Waterfront Towers stand in this aerial photograph taken above Atlantic City, New Jersey, U.S., on Monday, July 11, 2016.
A planned $225 million budget for Atlantic City keeps property taxes flat for a second straight year. Bloomberg News


New Jersey’s Department of Community Affairs, which implemented state intervention of Atlantic City finances in November 2016, said that the state is providing $3.9 million in transitional aid, a drop from $13 million awarded out of Trenton in 2017 and $26.2 million from 2016. Last year the city adopted a $222 million budget that lowered taxes for the first time in more than a decade.

“Yesterday’s announcement by Mayor Gilliam and Council President [Marty] Small demonstrates city officials are showing an understanding of the issues that Atlantic City faces and an emerging ability to find ways to solve them without resorting to property tax increases,” said DCA spokeswoman Lisa Ryan in a statement. “This is a solid budget, and the city staff who worked diligently to draft it should be proud of their efforts.”

Gov. Phil Murphy scaled back New Jersey's intervention efforts in April with the removal of Jeffrey Chiesa's role as state designee for Atlantic City. Chiesa, a former U.S. senator and New Jersey attorney general, was appointed to the role by former Gov. Chris Christie after the state takeover took effect.

State officials said after April’s bond sale, which was sold under New Jersey’s Qualified Bond Act, that the borrowing prevented the city from having to raise property taxes on residents by more than $700 on an average assessed home of $140,000.

The bonds are funding $37.7 million of pension and healthcare payments Atlantic City received state approval to defer in 2015 while facing a $101 million budget shortfall. The cash-strapped city now owes roughly $47 million for these obligations along with a 10% interest cost by the end of 2018.

Atlantic City still has deep junk bond ratings of Caa3 with a positive outlook from Moody’s Investors Service and CCC-plus from S&P Global Ratings. The Jersey Shore gambling hub had around $400 million in outstanding bond debt after April’s borrowing.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.