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March 31, 2015
Trenton, NJ
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.
* * * *
For further information contact: William G. Dressel, Jr., Executive Director at 609-695-3481, extension 122.
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