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Christie, Prieto meet on Atlantic City; city's credit rating downgraded again

Monday, April 4, 2016   (0 Comments)
Share | 4/4/2016

Gov. Chris Christie and Assembly Speaker Vincent Prieto met for about an hour Monday as they continue to argue over legislation for the state to take over financially imperiled Atlantic City. But the Republican governor and leading Democratic lawmaker have yet to reach an agreement, said Tom Hester, a spokesman for Prieto (D-Hudson). At the same time, Wall Street credit rating agency Moody's Investors Service announced it was downgrading Atlantic City's credit rating further into junk territory amid the "ongoing political stalemate." Christie and Prieto's meeting came a few hours before the governor is set to hold a news conference at 2:30 p.m. at the Statehouse about the battle over Atlantic City, New Jersey's only gambling resort, which is set to run out of money by the end of the week. Prieto also sent a letter to the Democratic members of the Assembly, explaining that he will not back down on his refusal to allow a vote on the takeover legislation. He repeated that he will not support the bill unless a provision is dropped that would allow the state to break unions' collective bargaining contracts. Christie has said he will sign an aid package for the city only if the state Legislature approves the takeover. The state Senate has done so, but the Assembly has not. This weekend, 13 Assembly Democrats sent a letter to Prieto pleading him to post the bill for a vote, saying Atlantic City and the state face "catastrophic" consequences if he doesn't. Experts say if Atlantic City defaults on debt or is forced to file for bankruptcy, the credit rating of municipalities across the state will drop. Moody's said Monday it had dropped Atlantic City's credit rating from Caa3 to Caa1, noting that bondholders could lose up to 35 percent of principal in light of the city's "very large structural deficit with limited sources of relied without state assistance." The agency said the rating could drop even further if the city doesn't address its budget deficit but increased if state lawmakers pass legislation that "meaningfully augments city revenues and materially reduces the structural budget deficit." The deal, which now must be approved by the city council Wednesday (April 6), calls for all city workers to continue working but having their pay period converted from 14 to 28 days. City officials say it wouldn't be a long-term fix. More money problems are likely to occur in the coming months without more help from the state, they say.

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