Atlantic City just averted a massive disaster... for now

Atlantic City, New Jersey was able to make a $1.8 million bond payment, avoiding default and a serious financial meltdown.

Mayor Don Guardian announced at a press conference Monday that the city will be able to make its payment to creditors for the month of May.

This payment comes after a showdown between Guardian and New Jersey Governor Chris Christie over the city's finances.

Guardian's plan to avoid a total takeover by the state, which focused on shifting city employees from a biweekly pay schedule to a monthly pay schedule was instituted in April. On the other hand, Christie wants the state and county to take over the city's finances and have the ability to renegotiate contracts with the city's public sector employees.

The deal reached in April was made just days before a government shutdown which would have closed all non-essential services in the city.

Despite this payment, the city is quickly running out of money and has found itself struggling to make necessary payments for schools, emergency services, and its debtors.

The city has accrued debt as it has lost significant revenue from its formerly large casino business.

Asked why the city would make the debt payment at all, Guardian said a default on any debt would drag down the credit rating for all of New Jersey and set up a worrying precedent for the city.

Atlantic City still has roughly $240 million in debt still outstanding, and Guardian would not speculate on whether or not the city will be able to make its obligations in June.