Atlantic City Pays Millions to Schools, Avoids Cash Freeze

Atlantic City made the rest of a tax payment it owed to its school system on Tuesday, hours before a judge was to consider freezing the city's cash until the debt was paid.

At a court hearing scheduled for Tuesday afternoon, the state Education Department was to seek an order to force the nearly broke city to pay its entire debt to the schools. A ruling against the city could force a partial government shutdown, but the payment to the schools appeared to lessen the likelihood of such a ruling, at least for now.

Representatives of the state Attorney General's office did not immediately return a message seeking comment. In court papers filed Monday, the office asked Judge Julio Mendez for an order compelling the city to pay the school system what it owes.

Last week, the city paid half of the $8.4 million installment that was due from property taxes that partially fund the school system. The city still owes the schools about $25.5 million by the end of the school year.

"If the (school) district does not receive the money owed, it will not be able to meet obligations such as teachers' salary and health benefits, charter school payments, and tuition payments to private schools for students with disabilities," the state wrote.

It wants the judge to order the city to make "regular and prompt" monthly payments.

The city, however, is in dire financial straits, brought on in large part by the contraction of its casino industry, which has seen its revenue plunge from $5.2 billion in 2006 to $2.56 billion last year. As the casinos became worth less, they and other property owners were able to successfully challenge their property tax assessments, blowing huge holes in the city's budget.

An aid package for Atlantic City, which would include a state takeover of its finances and major decision-making power, is stalled in the state Legislature, which can't agree on one of two rival measures being proposed. Gov. Chris Christie and others acknowledge the casino industry's decline as a major cause of Atlantic City's troubles, but they also blame generations of city political leaders for spending beyond the city's means.

Should the city run out of money before the next batch of tax payments arrives in early May, it plans to shut down nonessential government services. But visitors to the city probably would not notice much.

The casinos, restaurants and nightspots will remain open; police and firefighters will still protect the city, and garbage will still be picked up. A shutdown would be more likely to impact residents who need a marriage license, a death certificate or assistance with a code enforcement matter.

Copyright AP - Associated Press
Contact Us