TRENTON - New Jersey has filed a lawsuit against Atlantic City to stop it from making a payroll payment Friday because it owes its school district more than $30 million.

The lawsuit announced Monday by Gov. Chris Christie increases the pressure on Atlantic City Mayor Don Guardian and Assembly Speaker Vincent Prieto to support a takeover measure.

Atlantic City is set to run out of money on Friday.

Mayor Guardian says that his city has been making payments to its schools and for other expenses when they were told to do so by state overseers.  

Guardian says a state monitor for the schools confers almost daily with a state monitor for the city, and the two tell Atlantic City when to make required payments.

He also adds that a planned shutdown of non-essential city government has been avoided at least through May.

Christie and Senate President Steve Sweeney have been working to approve a measure allowing the state to run the city's government and say that is the best way to rescue the city.

However, Prieto is against the plan because he says that the bill unfairly gives the governor the authority to end union contracts. Collective bargaining rights could be canceled under the bill.

Prieto called on Sweeney to help negotiate a bill that would help the struggling city. Prieto says he has not been able to provide input into a state takeover bill, and says "the Assembly has to be relevant."

Credit ratings agency Moody’s downgraded Atlantic City's low-rated debt once again Monday. The agency cited the "ongoing political stalemate" in the State House and a possible default within the next year.

The Associated Press wire services contributed to this report.