State taking Atlantic City to court as money crisis deepens

TRENTON, N.J. (AP) — The continuing drama over Atlantic City's collapsing finances kicked into a higher gear on Monday, with Republican Gov. Chris Christie directing his education commissioner to sue the city to prevent it from making a payroll payment Friday because he said it owes its school district $34 million.

The lawsuit increases the pressure on Republican Atlantic City Mayor Don Guardian and Assembly Speaker Vincent Prieto, a Democrat, to support a financial takeover of the city by the state. Christie and Democratic Senate Speaker Steve Sweeney support the measure, but Prieto has refused to post it for a vote because he said it could allow the state to end collective bargaining agreements.

"What I'm looking to do now is manage a series of bad situations," Christie said at a statehouse news conference. "I think the situation is ratcheting up the pressure on all of us."

Atlantic City's city council will vote Wednesday on converting workers to a 28-day pay period, which would keep city government functioning after the city runs out of money on Friday. The state's lawsuit could put that plan into question.

The statehouse meeting comes after Christie and Prieto have been trading sharply worded critiques in recent days. Christie called Prieto a "co-captain of the Titanic," and Prieto said Christie should do his job and compromise.

Christie met with Prieto for about an hour on Monday but said that they made no progress on a measure that would allow the state to take control of the city's finances as it teeters toward possible financial failure later this week.

"I have repeatedly said I am willing, but our core values of collective bargaining and fair labor practices should not be the first things on the chopping block," Prieto said.

On Monday, Prieto also called on Sweeney to amend the takeover legislation but didn't specify how. Sweeney's office did not immediately reply to a message seeking comment.

Prieto has also said that Christie already has the authority to help Atlantic City, but the governor disagrees with Prieto and says the takeover legislation is necessary.

Also Monday, Atlantic City's already lowly-rated debt was downgraded once again by Moody's. Moody's cited the "ongoing political stalemate" in the statehouse and a possible default within the next year.

Atlantic City's financial crisis was brought about by the contraction of its casino industry, mainly due to ever-growing competition from casinos in nearby states. The city's casino revenue has fallen from $5.2 billion in 2006 to $2.56 billion last year. In 2014, four of its 12 casinos went out of business.