Atlantic City Administrator John Lund, Wednesday, updated the City Council on the budget process. Lund said a lot of work on the budget has already been accomplished. Operating budgets he said aren’t looking that bad. The trouble has been in the area of Capital Projects, which he said could reach a breaking point, where the City is spending more than it takes in.

He said another area of concern is the Debt Capacity. Lund says the City will have paid off 2011 series bonds at the end of the current Fiscal Year. That will lower the Debt Capacity. Speaking with County Assessor Brenda Nelson, the total assessed value was $352-million. City’s can borrow up to 5-percent of the total assessed value, or $17.6-million dollars, in Atlantic’s case.

The City currently has eight outstanding debts amounting to $13.5-million, which Lund says puts us at a Debt Capacity  of 77-percent. That will drop to slightly below 75-percent by the end of the Fiscal Year. The eight remaining debts will all fall off in clusters, in 2019, 2026, 2028  and 2035. The YMCA debt – which is a Revenue Bond – will be paid off in 2024.

All factors considered, Lund says the bottom line is that the City needs to watch its spending practices. He says the City’s days of borrowing money for the long term are over, at least for now. Revenue bonds are an option, but anything not tied to property taxes is a risky proposition.

Councilman Gerald Brink said the answer is more new construction., but Lund said that comes with a caveat: As long as that didn’t require the City to borrow money to help finance construction., and as long as the new construction is getting the taxable value on the books. If we offer incentives like tax abatement, we’re long delaying any benefits the City itself sees. Lund said “It’s good for the business and good for the property owner for sure, but it doesn’t do anything for the City for an extend period of time. He agreed, that it IS an investment in the future, though.