Though only affecting $3.3 million in state aid, a freeze on aid to New Jersey municipalities could be seen as a credit negative for Atlantic City, which is still trying to right its finances after barely escaping bankruptcy two years ago.
New Jersey Governor Phil Murphy signed an executive order suspending transitional aid to municipalities that placed nearly $235 million in reserve, including Atlantic City’s $3.3 million in transitional aid for the current budget year.
Analysts say the freeze creates uncertainty for the nine impacted municipalities in New Jersey and could be a source of budgetary pressure that leads to drastic cuts in services. Such aid, however, is usually released near the end of the fiscal year, so the freeze has not created an imminent threat.
However, as the city has been trying to shore up its finances after flirting with bankruptcy two years ago, its reliance on state aid has decreased. In 2016, the city received $26.2 million in aid from the state. Aid was reduced to $13 in 2017 and $3.9 million in 2018, according to the Press of Atlantic City.
Atlantic City has been under state control since late 2016 when then-Gov. Chris Christie and the state Legislature approved the Municipal Recovery and Stabilization Act.
