March 31, 2015
Statement on Atlantic City Budget Crisis and
Its Implications for All New Jersey Municipalities
Back on January 23, Moody’s Investor Services dropped Atlantic City’s bond rating by six levels. The agency dumped the City’s general obligation debt rating from Ba1 to Caa1.
The rating downgrade came one day after Governor Christie issued an Executive Order, in which he invoked the State Constitution to appoint an Emergency Manager for Atlantic City. What happens now is important, not just for the future of Atlantic City, but also to municipalities throughout the State. The manner in which the State determines to stand up to this challenge facing a troubled municipality, and how the rating agencies and Wall Street react to that, could resonate far beyond the geographic boundaries of Atlantic City.
League of Municipalities President, Mayor Brian Wahler of Piscataway, said:
“What happens in Vegas, stays in Vegas. But what happens in Atlantic City has repercussions that will be felt throughout the State.
We take great pride, and our municipalities benefit from the fact, that the State of New Jersey has a strong tradition of working with local elected leadership in severely distressed municipalities, to help them honor their obligations without resorting to, or even considering, as an option, municipal bankruptcy. In response to concerns raised in the bond markets by the Detroit bankruptcy, State officials have repeatedly reasserted this commitment, over the past two years. That commitment had strengthened the overall view of the rating agencies of the credit-worthiness of local governments throughout New Jersey.”
Given the State’s past record of careful and prudent intervention in severely troubled municipalities, we remain hopeful that responsible actions will be taken by State policy makers to relieve the pressures currently threatening Atlantic City and to reassure the bond ratings agencies of the stability of local finances throughout our State.
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For further information contact: William G. Dressel, Jr., Executive Director at (609)695-3481, extension 122.
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