There is only a “relatively mild” chance that the massive problems of Atlantic City will contaminate Atlantic County, according to Moody’s Investors Service.
“While Atlantic City remains the largest municipality in the county and its casinos are currently the largest taxpayers, the county's dependence on Atlantic City's tax revenues continues to decline,” Moody’s analyst Douglas Goldmacher said in a report Wednesday. “State law offers considerable protection from the city's financial trauma and the county has demonstrated a history of strong governance.”
New Jersey officially took over Atlantic City finance in November.
Goldmacher noted that Atlantic County has managed to partially offset Atlantic City’s declining tax base and gambling activity with growth in other municipalities. Atlantic City’s share of the county tax base is down to 18% from a peak of 39% in 2007.
Atlantic County also benefits from a New Jersey law that insulates the government from the city’s troubles because cites are required to make payments to counties and schools before taking their share. Goldmacher noted that Atlantic City has never missed a county tax payment and was only late once when special permission was granted in advance.
Moody’s rates Atlantic County general obligation bonds at Aa2 with a negative outlook. This is a stark difference from Moody’s Atlantic City rating of Caa2 with a negative outlook and Goldmacher emphasized that the county has a strong history of financial performance that will aid its credit strength.
“While Atlantic City has endured political gridlock, the county has achieved structural balance and demonstrated stability through budgeting accuracy, strong reserves and contingency plans,” said Goldmacher. “The county also has substantial fund balance and other trust funds and routinely prepares multiple budgets and tax schedules to account for Atlantic City's uncertain fate.”
