New Jersey and Atlantic City officials worked out a plan Tuesday to allow the state’s gambling center to spread out a $9.5 million budget deficit over five years as it prepares to issue nearly $36 million of refunding and new-money debt in the near term.
The agreement will help trim 2010 property tax increases down to 2% from an anticipated hike of 8%. Fiscal 2010 began Jan. 1. The city’s budget is $216 million.
New Jersey municipalities currently cannot raise property taxes above 4%. That cap drops to 2% in 2011.
Instead of allowing Atlantic City to boost 2010 property taxes above the 4% ceiling to solve the deficit problem this year, the state’s Local Finance Board opted Tuesday to allow it to address that budget gap over five years. The decision means the average property tax bill in Atlantic City will increase by $157 rather than $253, according to Gov. Chris Christie’s office.
The city has cut its payroll by 113 employees this year and is looking to leave some positions unfilled after their present occupants retire. Officials are also in the process of implementing furlough days.
“This is not the time, nor is it the right message to be sending, for Atlantic City to be imposing burdensome tax increases on its citizens and business community,” Christie said in a statement.
“We want to help Atlantic City through this difficult period, but we also want the city to improve and maximize its management and fiscal policies so it is best positioned for revitalization and long-term prosperity.”
Atlantic City plans to issue a nearly $12 million refunding deal in the next 30 days that will generate net present-value savings of $250,000 to $300,000 and a $8.7 million bond sale that will help the city pay what it owes in tax appeals, according to Mike Stinson, director of revenue and finance.
Powell Capital Markets Inc. and PNC Bank are the co-underwriters of the refunding and tax-appeals bond sales.
At about the same time, the city will sell $15 million of new-money bonds to help finance capital improvement projects.
City officials are reviewing whether to sell the new-money bonds through negotiation or through competitive bid.
Atlantic City had about $113 million of outstanding debt as of Dec. 31, 2009, according to Stinson.