The emergency manager appointed by Gov. Christie to analyze Atlantic City's finances said Friday that "parochial" political interests were impeding progress there and endorsed a state takeover of local government.
In his final report to the governor, Kevin Lavin said the city must enact structural changes and take bolder steps to cut costs, by monetizing assets to close a projected $300 million deficit over the next five years and be financially stable thereafter. He did not recommend bankruptcy.
Lawmakers are considering legislation that would transfer the local government's powers to the state - a plan that won the backing of the city's 10,000-member casino workers' union Friday.
Despite closing a $120 million deficit in 2015, Lavin said, Atlantic City's momentum "has been stalled by parochial politics that continue to inhibit progress, all to the detriment of the taxpayers of Atlantic City."
"Many of the most critical and financially important issues need to be addressed urgently," he said in a statement. "Without addressing these tough but necessary issues, Atlantic City will remain adrift from one fiscal and cash crisis to the next. As such, I support the legislative efforts underway in Trenton."
Senate President Stephen Sweeney (D., Gloucester), the sponsor of the takeover legislation, said, "I'm glad the emergency manager has, after spending millions of dollars in no-bid contracts and wasting months of time, concluded what we all know: that Atlantic City government is broken and needs to be fixed immediately."
He added that the takeover bill "must be acted upon promptly."
Forecast deficits over the next five years, not including unbonded debt such as pensions and health benefits, have been reduced by almost 75 percent compared with the deficit in 2015, Lavin wrote in the report.
"To eliminate the remaining forecasted deficits, decisive action must be taken by policy makers at the state, county and municipal levels to ensure a stable financial future for Atlantic City. Swift decision making and comprehensive planning that benefits all Atlantic City taxpayers must be achieved," he wrote.
He added, "The city must continue to identify operational cost savings, not only through layoffs and attrition, but by implementing creative solutions such as regionalization, consolidation, and privatization of municipal services."
Beyond the short-term reduction in operating costs, the city could save money on associated costs such as pension, health-care benefits, and other employee-related expenses such as workers' compensation, the report says.
The report offers Camden County as a model for such regionalization. Specifically, the city should consider consolidating or outsourcing to Atlantic County its police, fire, and health services, Lavin says.
Atlantic City Mayor Don Guardian, who has said he opposes a takeover, said Friday that he would review the report.
"Only two years into my first term as mayor, I fully recognize that much work still needs to be done to fix the problems that have accumulated over the past 30 years," he said in a statement. "We have worked together with everyone who wanted to work with us to make Atlantic City better, and we will continue to do so."
Christie named Lavin emergency manager in January of last year amid a crisis in Atlantic City: Four casinos closed in 2014, and thousands of workers lost their jobs. Although Atlantic City once had a monopoly on gaming on the East Coast, competition has sprouted up in Pennsylvania, New York, and elsewhere.
The city's property-tax base shrank from $20.5 billion in 2010 to $7.3 billion in 2015, a reduction of 64 percent.
Eight casinos remain in Atlantic City, and lawmakers are considering asking voters to approve two new ones in North Jersey.
Bills passed by the Legislature that sit on Christie's desk could cut the projected five-year deficit in half, the report says. A key provision of the legislative package is a system whereby the casinos would pay a collective sum of at least $120 million over 15 years, instead of taxes based on their assessed value.
Atlantic City balanced its 2015 budget anticipating revenues based on the pending legislation.
Lavin recommends generating revenue by selling or privatizing the city's Municipal Utilities Authority, which operates its water department; Bader Field; and Gardner's Basin, which houses the Atlantic City Aquarium and other establishments.
Lavin says the city should pursue public-private partnerships to develop property and generate more revenue.
He plans to leave his job as full-time emergency manager but has offered to serve as a consultant on an as-needed basis.
Reuters reported Friday that the emergency manager's team had cost taxpayers about $2.6 million.