The almost bankrupt Atlantic City narrowly managed to avoid defaulting on its payment schedule, after the city scraped together $1.8 million and completed its bond payment on the morning of May 2nd. The city was supposed to make its payment on May 1 but since it fell on a Sunday, giving the city an extra day to raise the money.
If Atlantic City had to default on its payment, it would have become the first municipality in New Jersey to not make its debt payments in the last 78 years. The payment was made at 10 am on a Monday morning, just an hour before Atlantic City Mayor Don Guardian was scheduled to hold a press conference.
The mayor wasn’t very positive about the financial position of his city and stated that coming up with the money at the last hour was like rummaging in the sofa trying to find any stray cash that was hiding under the cushions. The mayor once again expressed his disappointment at New Jersey legislators who went back on their promise of providing the city $33 million as a financial bailout package.
Atlantic City is expected to make its next payment of $8.5 million on May 15 to the school district but according to the mayor, this is highly unlikely, as the city has only around $7 million available at this point of time. The city has filed a lawsuit against the state to get the courts to award it the $33 million that it was promised but has so far not had any success.
New Jersey has proposed to take over the financial management of Atlantic City, but that proposal has been rejected by the city. While New Jersey governor Chris Christie and Democratic Senate President Steve Sweeney continue to push for a state takeover, Democratic Assembly Speaker Vincent Prieto has not been in favor, as he is concerned that this agreement would damage union contracts.
The mayor has fought hard to avoid a state takeover and has so far succeeded. In a statement, Mayor Guardian said “Today it’s Atlantic City, but tomorrow it could be Paterson, Trenton or Newark. Cities could fall like dominoes. It could even one day be Toms River, Cherry Hill or Middle Township.
The decline of Atlantic City’s casino industry has been the main cause for the collapse of the city’s finances as casino revenue dropped from $5.2 billion in 2006 to $2.56 billion in 2015. New Jersey legislators are also discussing a proposal to develop two new casinos outside of Atlantic City in an effort to compete with the neighbouring states.
This proposal has also been rejected by Atlantic City who believes that developing new casinos outside the city will further hurt its struggling casino industry.