- Wikimedia Commons
Atlantic City, New Jersey was able to make a $1.8 million bond payment, avoiding default and a serious financial meltdown.
Mayor Don Guardian announced at a press conference Monday that the city will be able to make its payment to creditors for the month of May.
This payment comes after a showdown between Guardian and New Jersey Governor Chris Christie over the city’s finances.
Guardian’s plan to avoid a total takeover by the state, which focused on shifting city employees from a biweekly pay schedule to a monthly pay schedule was instituted in April. On the other hand, Christie wants the state and county to take over the city’s finances and have the ability to renegotiate contracts with the city’s public sector employees.
The deal reached in April was made just days before a government shutdown which would have closed all non-essential services in the city.
The next big showdown comes in June, as the city will have to make another round of debt payments, pay employees, and make payments for schools and services. So while this is a sigh of relief, it is not the end of the budget crisis by any means.
The city has accrued debt as it has lost significant revenue from its formerly large casino business.
Asked why the city would make the debt payment at all, Guardian said a default on any debt would drag down the credit rating for all of New Jersey and set up a worrying precedent for the city. Atlantic City’s debt has already been slashed to junk level by Moody’s and Standard & Poor’s.
Atlantic City still has roughly $240 million in debt still outstanding, according to Guardian.