Atlantic City avoids default, makes $1.8M bond payment

ATLANTIC CITY, N.J. (AP) — Cash-strapped Atlantic City scraped together enough money to make a $1.8 million bond payment Monday morning, narrowly avoiding becoming the first New Jersey municipality to default on its debt in 78 years.

Mayor Don Guardian said the payment was made at 10 a.m., an hour before a news conference at which he came out swinging against a proposed state takeover of Atlantic City’s finances.

“Financially, we’re running on fumes,” Guardian said. “We really are teetering on the edge.”

The payment technically was supposed to be made on Sunday, but the city gets an extra day because the payment date fell on a weekend.

The city is expected to receive its next tax payments on Monday.

Guardian’s announcement came as state leaders continue to argue over plans to help the struggling city avoid bankruptcy. The state Senate has passed a takeover plan supported by Republican Gov. Chris Christie and Democratic Senate President Steve Sweeney, but Democratic Assembly Speaker Vincent Prieto has refused to put it up for a vote in that chamber, partly because it would allow the state to break union contracts.

Prieto instead has introduced his own plan that would give the city two years to fix its issues before the takeover takes effect. A vote on that bill could be held on Thursday.

Guardian, a Republican, called the takeover unconstitutional, saying it would strip residents of their rights.

“Today it’s Atlantic City, but tomorrow it could be Paterson, Trenton or Newark,” he said. “Cities could fall like dominoes. It could even one day be Toms River, Cherry Hill or Middle Township.

Had Atlantic City not made the payment, it would have become the first New Jersey municipality to do so since Fort Lee in 1938. That borough went bankrupt later that year.

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Follow Wayne Parry at http://twitter.com/WayneParryAC

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