The state Senate on Monday passed controversial legislation that would allow the state to take over large swaths of Atlantic City's local government.
TRENTON -- The state Senate on Monday passed controversial legislation that would allow the state to take over large swaths of Atlantic City's local government in an effort to rescue the financially struggling gambling resort town.
Now, the question is whether the bill will go any further.
The Senate voted 27-9 in favor of the measure (S1711), which would allow the director of the state Local Finance Board to restructure Atlantic City's debt, break union contracts, sell off city assets, and more for five years.
Gov. Chris Christie and state Senate President Stephen Sweeney (D-Gloucester) have been pushing the plan as the best way to save the city, which has given billions of dollars in casino tax revenue to the state for decades but has seen four casinos close in recent years, cutting its casino tax revenue base in half.
Still, the state Assembly would also need to pass the plan before it heads to Christie's desk for approval, and it is unclear whether it will ever be posted for a vote in that chamber. Assembly Speaker Vincent Prieto (D-Hudson) has said he will support the plan only if it protects unions' collective-bargaining rights.
Time is running out for an agreement. The city is expected to run out of money by the end of the month.
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And Wall Street credit ratings agency Moody's Investors Service released a report last week saying the city could default on its debt as early as next month and face bankruptcy if lawmakers don't pass the takeover bill and a companion measure that allows casinos to make payments in lieu of taxes -- known as the PILOT bill.
The Senate on Monday also passed the latter measure -- which is designed to eliminate costly casino tax appeals -- by a 34-3 vote.
Experts say allowing Atlantic City to go bankrupt could hurt the credit ratings of municipalities across New Jersey.
"When Wall Street and other credit agencies realize New Jersey will not support its public institution, it could mean major financial trouble for many of our institutions," state Sen. Paul Sarlo (D-Bergen), a co-sponsor of the takeover legislation, said before Monday's vote. "I think (the takeover is) the only solution we have to get financial house in order in Atlantic City."
State Sen. Jim Whelan (D-Atlantic), a former Atlantic City mayor, also supported the plan despite having reservations.
"I still live there," Whelan said. "I'm not happy about this. None of us are. It's a difficult decision. But we're sent here to make difficult decisions. And this is one we have to make for the betterment of Atlantic City."
The vote came on the same day that the Senate and Assembly approved another plan that critics say could hurt Atlantic City: putting a question on November's ballot asking New Jersey voters to approve expanding casino gambling to the northern part of the state.
Stilll, local officials -- and some lawmakers -- have blasted the plan, saying it would strip local residents of their civil rights to have the leaders they elected run the city. Mayor Don Guardian had said it would create a "fascist dictatorship."
State Sen. Ron Rice (D-Essex), the leader of New Jersey's Legislative Black Caucus, said it's lawmakers' duty to "make sure these elected officials are not disenfranchised."
State Sen. Nia Gill (D-Essex) said part of the blame has to be placed on the state itself for not fulfilling its promise to help the city in the past. Christie's administration took over the city's tourism district and placed a state monitor in the city in 2010.
She also noted that Christie vetoed the PILOT bill in January even though it included changes he asked for. The governor said he did so because local leaders have not done enough to fix the problem and that a takeover is now needed.
Though Atlantic City officials simply want state lawmakers to pass the PILOT bill, it's unlikely Christie would sign off on it without the takeover in tow.
"This is not because of Atlantic City, but because of the story of pernicious state of New Jersey," Gill said. "I say we do not give in to that story."
Gill also said the bill could be a blueprint for state takeovers of other cities.
"If they can do it in Atlantic City, they can do it in Newark," she said.
Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on Twitter @johnsb01. Find NJ.com Politics on Facebook.