Atlantic City's credit is continuing to spiral downward.
The city has been facing issues due to its large public pension plans and funding issues. According to reports, the city's mayor Don Guardian has said that the city will shut down any non-essential city services starting Friday if a plan is not reached.
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The Governor and Mayor Guardian have been presenting differing plans on how to address the debt issue. Guardian's plan would delay payment to the unionized city workers, switching to a once-a-month payment plan.
In Governor Christie's opinion this is only a temporary fix, and more must be done. He has suggested that the state take over some of the city's operations, including handling debt and union contract.
In addition, Christie's office filed a lawsuit today to compel the city to continue making payments to the city's school system according to the Press of Atlantic City.
On top of all of this, credit rating agency Moody's once again cut the debt rating for the New Jersey city to Caa1 from Caa3. This is the third-lowest credit rating from Moody's and well into junk territory.
The downgrade impacts $16 million of the $345 million of Atlantic City's debt.
"The downgrade to Caa3 reflects the greater likelihood of default within the next year and higher probability of significant bondholder impairment given an ongoing political stalemate over an Atlantic City fiscal rescue package," said a release from Moody's.
"The downgrade also incorporates renewed signals from the state that bondholders will face losses as part of a possible debt restructuring. The Caa3 rating indicates an expected loss to bondholders of up to 35% of principal, in light of the city's very large structural deficit with limited sources of relief without state assistance."
New Jersey Governor Chris Christie said in a press conference Monday that the debt is now just as bad as Puerto Rico, which is facing possible bankruptcy. The island also has a rating of Caa1 on its debt from Moody's.
Business Insider has reached out to Chris Christie's office for further comment and we will update if we hear back.
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