ATLANTIC CITY Standard & Poor's downgraded Atlantic City's credit rating from A-minus to BBB-plus on Monday, citing mainly the closing of four of 12 casinos this year.
The downgrade, which includes a negative outlook for the city, comes as Atlantic City is struggling with the loss of tax revenue because of the closures.
Combined, the shuttered gambling halls - Atlantic Club, Showboat, Revel and Trump Plaza, which closed last Tuesday - generated about $75 million in property tax revenue last year. A fifth - Trump Taj Mahal - may close in November.
In addition, a series of casino tax appeals since 2007 - in which they successfully argued to lower their property taxes due to declining gambling income - has resulted in more than $350 million in tax refunds. The city is repaying the casinos largely with borrowed money.
To help compensate for the loss in property tax revenue from casino appeals, Atlantic City residents absorbed a 32 percent hike in the city's tax rate this year, which comes on top of last year's 17.5 percent increase.
On July 23, Moody's Investors Service assigned Atlantic City junk bond status with a rating of Ba1. The S&P downgrade this week puts the city's general-obligation debt three steps above junk.
"Although Atlantic City's rating was lowered . . . this is not the doom and gloom projected by many because a BBB-plus rating is still investment grade," Mayor Don Guardian said in a statement Monday. "Since becoming mayor in January, I recognized that we were on a financially unsustainable course. That's why I have made it my priority to not continue 'business as usual' in Atlantic City.
"We will do our share of rethinking local government and drastically cutting costs," Guardian said.
Guardian said that Northeastern U.S. gaming competition has severely cut into Atlantic City's gambling revenue - down to $2.9 billion last year from $5.2 billion in 2006 - and that his goal was to stabilize the city's finances for the long-term and to focus on bringing non-gaming entertainment and events.