Moody's: Atlantic City could default without drastic action

ATLANTIC CITY, N.J. (AP) — Atlantic City could face default as early as April without "drastic action" from the state, a ratings agency on Wednesday warned.

Moody's said in an analysis that Atlantic City will run out of money in the next few weeks if two measures aren't approved by lawmakers, which could lead to bankruptcy. The state Senate's Budget Committee is scheduled to consider both bills Thursday.

The first measure would strip Atlantic City of most of its decision-making power and give the state the right to break contracts and sell off city assets to help get Atlantic City's troubled finances under control. The second would allow casinos to make payments in lieu of taxes.

The bills are backed by Senate President Steve Sweeney and Gov. Chris Christie. Assembly Speaker Vincent Prieto said they need to be changed to ensure the state can't unilaterally cancel public employee contracts.

Moody's said that the city's projected $102 million deficit would be cut by 73 percent this year and be almost gone by 2020 if both bills passed.

"No matter which scenario ultimately occurs, Atlantic City's financial position remains vulnerable to external factors such as further casino closures and deteriorating state finances," Moody's said in a statement.

Reeling from the continuing contraction of the casino industry — its largest employer and taxpayer — Atlantic City could run out of cash within weeks. In January, Christie vetoed an aid package that would have helped the city and its casinos, saying Atlantic City has not done enough over the years to stabilize its finances.

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