New Jersey acted to take control of Atlantic City away from its elected officials amid a slump in gambling revenue after the state rejected the city's turnaround plan because it didn't cut costs enough to stave off bankruptcy.

The state's Local Finance Board voted 5-0 to approve a five-year state takeover of the city yesterday, giving the board the right to sell the city's assets, negotiate union contracts and dismiss the city's workers.

Timothy Cunningham, the head of the Local Finance Board, will assume the powers of the city's governing body, except that of declaring bankruptcy, said Tammori Petty, Director of Communications at the New Jersey Department of Community Affairs. Cunningham wasn't available to comment today, Petty said.

"We will continue to work with the State of New Jersey on behalf of our residents while continuing to keep all of our options on the table," Atlantic City Mayor Don Guardian said in a statement Thursday in which he defended the city's recovery plan. 

That plan, which was rejected, didn't include a proposed balanced budget for 2017, included several financial shortfalls over the recovery period totaling about $106 million, and didn't cut deep enough to stave off bankruptcy, according to New Jersey Department of Community Affairs Chairman Charles A. Richman.

Atlantic City became the gambling hub of the east coast after casinos were legalized in 1976, attracting patrons from Washington to Boston. In recent years, though, bordering states including Pennsylvania and Maryland have legalized gambling to keep those in-state gambling dollars closer to home.

As a result, five of the southern New Jersey's city's 12 casinos have closed since 2014, costing the city millions in revenue and thousands of jobs.

Municipal tax revenue has declined by 70% from $21 billion to $6 billion since 2010. The city of 39,000 residents is about $500 million in debt. In 2015, the city had a budget shortfall of $101 million and a $47 million deficit in the school district.

The Borgata, formerly a joint venture of Boyd Gaming (BYD) and MGM Resorts (MGM) that is Atlantic City's biggest money maker, has seen its annual revenue drop 83% in that time period. Harrah's, owned by Caesars Entertainment (CZR) , has seen its revenue fall from $365 million to $57 million annually in the last three years.

Still, some gambling companies have benefited. MGM Resorts bought Boyd Gaming's stake in The Borgata for $900 million earlier this year and attributed its third quarter revenue growth to the deal. Revenue for the period grew to $2.52 billion from $2.28 billion a year ago.

This week's vote is the latest step in a process that has seen Trenton take over the city's affairs. In 2010 the state exerted oversight over the city's tourism district and in 2015 Governor Christie appointed an emergency management team to oversee some of the state's business.

More from Stocks

Fiat Chrysler Recalls 4.8 Million Vehicles Over Cruise Control Issue

Fiat Chrysler Recalls 4.8 Million Vehicles Over Cruise Control Issue

One Thing to Consider Over Memorial Day Weekend: Are Stocks About to Collapse?

One Thing to Consider Over Memorial Day Weekend: Are Stocks About to Collapse?

North Korea, Apple, GPDR and Gap - 5 Things You Must Know

North Korea, Apple, GPDR and Gap - 5 Things You Must Know

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Complying With GDPR Could Be Costly for Facebook, Google and Other Tech Giants

Complying With GDPR Could Be Costly for Facebook, Google and Other Tech Giants