Gov. Christie vetoes Atlantic City bailout: What happens next?

With an iconic boardwalk and glitzy high-rise casinos by the sea, it used to be 'America’s Playground.' But Atlantic City, as of Tuesday, is on the brink of bankruptcy, after New Jersey Gov. Chris Christie vetoed legislation that would have helped revive its tax revenue and cash flow.

Atlantic City Mayor Don Guardian, a Republican, and its City Council President Marty Small, a Democrat, are planning an emergency city meeting next week to consider filing for bankruptcy, a motion that must be approved by the state.

"If the state is not able to come up with the funding we need within the next few weeks, we will have no choice but to declare bankruptcy," Mr. Guardian said in a statement.

The legislation aid package, worth $33.5 million for Atlantic City, was first passed by state lawmakers in June. It included measures to stabilize the casino town’s property tax base and establish fixed payments for tax appeals. In November, Mr. Christie, a Republican candidate for the 2016 presidential election, vetoed the bill and asked for certain changes.

When the Democratic-led legislature then amended the measure and passed it again, Christie, vetoed it for the second time Tuesday.

"Atlantic City government has been given over five years and two city administrations to deal with its structural budget issues and excessive spending," said Christie spokesman Kevin Roberts. "It has not. The governor is not going to ask the taxpayers to continue to be enablers in this waste and abuse."

Without the aid from the legislation, Atlantic City’s cash flow is projected to run dry by early April.

"We're shocked that the governor, who presented us with his bill, reneged on the funding," Guardian said.

Atlantic City’s district assemblyman, Vince Mazzeo, a Democrat, echoed disappointment, and said that Christie's vetoes showed a "brazen disregard" for Atlantic City's fiscal recovery.

The state Senate president Steve Sweeney, another Democrat, also initially supported the aid package but no longer does. He now supports a state takeover of the city's operations, a move strongly opposed by Guardian and Small.

"We cannot afford to let Atlantic City go bankrupt," Mr. Sweeney said in a statement. "The best way out is for the State of New Jersey to take control of Atlantic City's finances and the best way to do it is to act quickly."

Atlantic City's casino revenue has drastically declined in the past decade, from $5.2 billion in 2006 to $2.56 billion in 2015. Thousands of jobs have been lost, as four of the city's 12 casinos have shut down in the past year.

Municipal bankruptcy is rare in the United States, even though many cities and towns struggle with steep debt. Most communities reserve bankruptcy as a last ditch, final effort to achieve solvency. Still, bankruptcy doesn't necessarily spell doom for communities.

In 2013, Detroit became the largest city in the United States ever to file for bankruptcy. Since then, it has showed promising signs of improvement. After paying its debt and other expenses in the current fiscal year, the city will likely end up with a $35 million budget surplus.

This report contains material from the Associated Press and Reuters.