By Andrew Seidman

New Jersey lawmakers have agreed to a plan to help Atlantic City fend off bankruptcy and could send the legislation to Gov. Christie's desk by the end of the week.

The Assembly Judiciary Committee on Monday voted 6-0, with one abstention, in favor of a two-bill package that would give city officials five months to present a five-year financial plan, including a balanced budget for calendar year 2017, to the commissioner of the state Department of Community Affairs.

The development appeared to break a months-long political impasse that had divided the state Democratic Party and pitted Assembly Speaker Vincent Prieto (D., Hudson) against Senate President Stephen Sweeney (D., Gloucester) and Christie, a Republican, who had pushed for a more aggressive approach.

It also forestalled, at least temporarily, what once seemed like an inevitability: a state takeover. Prieto said he expected the full Assembly to vote on the legislation on Thursday.

While the legislation gives the city more time to cut its budget and restructure debts, it's unlikely to be a panacea for the resort town's financial woes.

The city's property-tax base has dropped from $20.5 billion in 2010 to $6.5 billion this year, according to the state. Property taxes accounted for 86 percent of its 2015 budget.

Analysts on Wall Street have raised doubts that even extraordinary state aid could help the city avert a default on bond payments or debt restructuring.

Nevertheless, Mayor Don Guardian said the city was up to the challenge. "It's up to us now to make sure we keep our sovereignty," he told reporters after the vote.

In addition to developing a financial plan, the city would receive tens of millions in aid annually through the reallocation of various tax revenues.

Another bill would establish a payment-in-lieu-of-taxes system, under which the eight casinos would cumulatively pay the city about $120 million annually for 10 years, adjusted for gross gaming revenues.

If the state were to approve the city's financial plan, the city would retain its autonomy and be required to balance its budget and meet the goals set forth in its financial plan, as well as obligations such as remitting property taxes to the school district and Atlantic County.

If the commissioner were to reject the city's proposal, the state would be able to take over the city government and use all the powers outlined in the Sweeney bill that passed the Senate in March: terminate labor contracts, restructure debts, sell assets, dissolve agencies, and fire employees.

Moreover, if the city mismanaged its budget anytime during five years, the state could intervene.

Any decision by the DCA commissioner can be appealed through the courts.

The bill amends Sweeney's original legislation, which called for an immediate state takeover and an aid package that included a payment-in-lieu-of-taxes system.

The PILOT program remains intact, with a significant change: the new bill eliminates language that would have allowed Atlantic City casinos to opt out of the program should voters approve a referendum in November authorizing the expansion of gambling to North Jersey.

Also under the new proposal, the state would offer early-retirement incentives to city employees to mitigate layoffs.

The bill also proposes a bridge loan to the city to help it close its deficit for the current fiscal year, which was recently pegged at $86 million but continues to grow.

Although Sweeney's original bill passed the Senate easily, Prieto refused to post it for a vote in his house, saying he objected to a provision that would allow the state to terminate collective bargaining agreements.

So in April, Sweeney and his allies proposed what they described as a compromise: give Atlantic City, a town of 40,000, 130 days to submit a legally binding plan to cut its budget in half, and the state would provide a bridge loan.

Prieto dismissed that as unrealistic, but the new timeframe set the framework for further discussions -- especially after the speaker failed to gather enough support for his own bill earlier this month.

The new agreement "comes a long way from taking over on Day One," Prieto told the panel of lawmakers. "It gives the municipality and the governing body a chance for self-governance."

Speaking to reporters before the vote, Sweeney said that if the Assembly moved the bills forward, he expected the Senate to concur and the governor to sign it.

Guardian wouldn't say Monday how much he thought he would need to cut his budget, or if layoffs would be necessary this year.

The city's 2016 budget is roughly $250 million, according to the state. Guardian said that going forward, he anticipated cutting that figure below $200 million.

Charles A. Richman, commissioner of the Department of Community Affairs, told lawmakers in April that the city had about $550 million in debt.

That includes $150 million the city owes in property-tax refunds to the Borgata casino. Under the bill, the city could borrow money to pay off that debt. Revenues from the investment alternative tax, a levy on gross gaming revenues currently paid by casinos to the Casino Reinvestment Development Authority, would be redirected to cover the city's debt service.

Now Atlantic City can't realistically access the capital markets because investors would demand high interest rates because of the city's poor financial condition.

But with state aid, lawmakers anticipate the city would be able to issue new bonds once it showed signs of progress. Alternatively, the city could restructure its debt with the Borgata.

(c)2016 The Philadelphia Inquirer