This week Atlantic City, New Jersey was able to avoid defaulting on its debt by making a $1.8 million bond payment, which could have proven disastrous for the city's casino industry.
The city has about $6 to $7 million cash on hand, but outstanding obligations to its debt, school operations, and other obligations. Atlantic City has suffered lately, as the casino industry has shrunk in recent years, with four casinos closing their doors in 2014 alone, which has hurt tax revenues. This has created problems, as the city has not curbed its spending to account for the discrepancy.
If it had missed the payment, Atlantic City would have been the first New Jersey city to miss a debt payment in nearly 80 years.
The state government of New Jersey is pushing a plan to take over Atlantic City's finances in an effort to bail them out, but such a proposal is controversial, as it would allow the state to break union contracts. Mayor Don Guardian is against such a move, calling it unconstitutional and could lead to other cities having their rights stripped. "Today it's Atlantic City, but tomorrow it could be Paterson, Trenton or Newark," Guardian said. "Cities could fall like dominoes. It could even one day be Toms River, Cherry Hill or Middle Township."