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Atlantic City’s situation could be very serious. Rising costs continue to push up municipal spending, while a declining tax base is reducing the city’s revenue. In the short term, the city borrows in the bond market to pay for shortfalls and for unexpected declines in revenue, primarily from tax appeals. In the long term, this cannot last.
This is a problem not just for Atlantic City but for all of New Jersey, since the state may be required to take-over the management of the city. In that case it could become very costly for New Jersey taxpayers.