Budget Crunch Hits Atlantic City Hard

Casino hotels next to the Atlantic Ocean in Atlantic City. i i

Atlantic City is taking a gamble that firing some of its city workers will shore up its deficit. Economists say cuts by state and local governments are creating a drag on the economy. Saul Loeb/AFP/Getty Images hide caption

itoggle caption Saul Loeb/AFP/Getty Images
Casino hotels next to the Atlantic Ocean in Atlantic City.

Atlantic City is taking a gamble that firing some of its city workers will shore up its deficit. Economists say cuts by state and local governments are creating a drag on the economy.

Saul Loeb/AFP/Getty Images

Three years ago, Robert Mooney finally reached his goal of becoming a police officer.

He grew up in Atlantic City, N.J., and says he decided to become a police officer when he was a small kid. "My best friend was killed when he was younger and it kind of motivated me," Mooney says. "I always thought about it."

But last month he had to turn in his gun and badge. Mooney, who worked patrol, was among the 20 Atlantic City police officers laid off by the city.

"You're a police officer — you take care of people," Mooney says. "All of a sudden that's gone, so your identity is tarnished."

Since August 2008, state and local governments have cut 242,000 jobs, and that number is expected to grow as many states face massive deficits. Just as the private sector is starting to eke out some growth, the public sector is putting a drag on the recovery.

A First Round Of Cuts

In total, 39 city workers were laid off in what Atlantic City Mayor Lorenzo Langford says is the first round of cuts. The city has requested state permission for an additional 93 layoffs later this year.

"It's never easy," Langford says. "We're talking about people's livelihoods; you know things are tough out here. But at the same time there are certain mandates that we have to come into compliance with, so you have to do what you have to do."

One of those mandates is balancing the city's budget. At the moment, Langford says Atlantic City faces an $11 million deficit.

City leaders say the unions could have given up more, and police officers say they're being unfairly targeted by the mayor. It's messy — but maybe that's what one might expect from Atlantic City, with its famous boardwalk and infamous history of public corruption.

Mounting Deficits Nationwide

But when it comes to budget problems, Atlantic City isn't alone. "We're starting to see more of it around the country," says Jon Shure of the Center on Budget and Policy Priorities. "It's not just police and firemen. It's teachers as well."

Shure's group has been pushing for Congress to give more aid to states. He says the revenue picture is starting to improve slightly as the economy slowly picks up. The problem is that stimulus funds that helped state and local governments through the past couple of years are running out, leaving gaping budget deficits.

"So you turn off that tap [of federal aid] and it sounds like productive belt tightening," Shure says. "But really it threatens the recovery and makes the quality of life worse for people."

This may sound like a whole lot of hyperbole. But even Federal Reserve Chairman Ben Bernanke says state and local government layoffs are having an impact. "They are still in a cutting mode and seem likely to cut several hundred thousand jobs going forward," Bernanke recently told Congress. "That is a drag on the economy, no question about it."

But Brian Riedl, a research fellow at the conservative Heritage Foundation, says it doesn't make economic sense to send more federal money to help state and local governments. He says the current fiscal crunch is just a normal part of the boom-and-bust cycle of government spending.

"During booms, money flies in and states run huge surpluses," Riedl says. "During recessions revenues plummet, and they often have to lay off a lot of people."

Atlantic City police officer Troy Maven Sr. was one of those recently laid off. He has two kids to support, and a dog, he says with an uncomfortable chuckle.

"I bought a house right when I went into the academy," Maven says. "Right now it's tough. I don't know what I'm going to do. Trying to make ends meet, it's just horrible."

He never thought he'd be in this position. He never thought the city would lay off police officers. But it did.

In this soft economy many other cities also face these difficult choices.

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