A compromise with Golden Nugget Atlantic has kept a series of bills alive in the New Jersey legislature designed to stabilize casino taxes in Atlantic City.
But a final vote on the bills was blocked last week while officials try to work out a deal to save the bankrupt Trump Taj Mahal from closing.
The New Jersey Assembly Appropriations Committee approved a package of bills designed to set payment in lieu of taxes payments for the resort’s casinos based on property size and gambling revenue.
Golden Nugget officials charged that the tax payments were not fairly divided and would have placed an unfair burden on their casino. They argued that the plan placed a higher burden on small casinos—requiring more in taxes than they currently pay—while giving tax breaks to larger casinos. Casino officials threatened to challenge the bills in court if approved.
The casino’s property taxes would have risen from $4.7 million to $8.1 million under the unrevised bill, but changes in the legislation would help casinos that would be billed more under the payment in lieu of taxes program than it did this year. The amendment credits the amount of the overage toward the casino’s reinvestment tax obligation for five years.
The change also eliminates Golden Nugget’s $2 million annual share of payments to help fund the Atlantic City Alliance, a marketing group funded by casinos.
The casino’s general counsel, Steven Scheinthal, told the Press of Atlantic City that the compromise reached with lawmakers would keep the casino’s tax payments stable for at least five years and should provide enough protection for Golden Nugget.
Scheinthal said the casino will not sue to block the plan.
“It’s a give and take,” he told the Press. “Nobody’s happy, but sometimes when nobody’s happy, that is the best compromise. I think the legislators are doing the best they can without giving pushback.”
According to figures provided by Golden Nugget, two other casinos—Resorts and Bally’s—would also see increases while casinos such as Borgata, Tropicana, Harrah’s and the Trump Taj Mahal would see major reductions.
The five-bill package includes property-tax reform, additional school aid from the state to the city and allocates some state casino reinvestment funding to help pay down the resort’s municipal debt.
Casinos would pay $150 million in lieu of property taxes cumulatively for two years and $120 million for 13 years after that. Officials hope this will stabilize the city’s tax revenue, which has been buffeted by a series of casino tax appeals and four casino closings this year.
The city would also receive $30 million in casino funding for two years that currently goes to the Atlantic City Alliance, a casino-backed marketing coalition that would be dissolved. Also, the state Casino Reinvestment Development Authority—which is funded by a separate tax on casinos—would pay down $25 million to $30 million of the city’s annual debt.
Vote Delayed
Final votes on the bills were delayed, however, after a potential deal between billionaire Carl Icahn, Trump Entertainment and the city’s main casino workers union to rescue the Taj Mahal appeared to fall through late last week.
A plan to save the casino and settle its differences with Local 54 of Unite Here—which represents about 1,100 Taj workers—appeared to be in place, but fell through when Icahn would not sign off on the plan.
Icahn would take control of the Taj Mahal under a bankruptcy plan in exchange for $286 million in debt he controls at the property. He would then invest $100 million in the casino.
Icahn has been fighting with the union on a number of issues. Union officials signed a new agreement with Trump Entertainment—which still owns the casino—but Icahn did not sign off.
That caused the bills to be pulled from the Legislature’s agenda.
Assemblyman Vince Mazzeo, a prime sponsor of the legislation, strongly criticized Icahn for holding up a plan that is crucial for stabilizing Atlantic City’s economy.
“These types of shenanigans that are pulled, it’s not fair business to me,” Mazzeo told the Press of Atlantic City. “From our perspective, the state is giving the Taj Mahal a property tax decrease, and we want the workers to have a contract, so all five bills are on hold,” he said.
A vote is not likely until January, Mazzeo said.
In the meantime, Icahn has agreed to pump $20 million into the Taj to keep it operating as negotiations continue. The casino had been scheduled to close December 20.
Local Opposition
The plan, however, is also meeting local opposition.
Figures released by the Atlantic County Board of Taxation show property owners in every municipality of the county—including Atlantic City—would see their county tax rates rise if the Atlantic City recovery plan is given final approval.
The board predicted an overall increase of 20 percent in the county tax rate. Though officials said the increase could be low overall, they could not rule out a double-digit tax rate increase in some municipalities.
Meanwhile, a New Jersey Assemblyman who serves Atlantic City has introduced a competing plan.
Assemblyman Chris Brown introduced a proposal Wednesday that would eliminate the PILOT program while freezing Atlantic City taxes for five years at 2014 levels on all taxable property, including casinos. It would also retain the Atlantic City Alliance marketing effort and redirect some redevelopment tax revenue to help Atlantic City’s municipal finances.
“Under the proposed PILOT plan, only casinos get a tax break,” Brown said in a press release. “Our middle class is working harder and longer, but earning less. It’s not fair to ask our middle class families to pay more, while casinos owned by big corporations pay less than their fair share.”
Atlantic City’s Proposal
Also, Atlantic City mayor Donald Guardian unveiled the city’s plan to cut $40 million from its budget by 2017. The plan includes layoffs—though precise figures weren’t given—and increases in state aid for the resort.
Guardian said the city’s workforce has already been cut by 141 jobs through “aggressive attrition. The plan also seeks to better utilize the city’s land assets to attract development and giving some municipal responsibilities back to the state, such as code enforcement.
Guardian, however, came out strongly against a proposal to have a state-appointed manager run the city.
Guardian said the city has already been working closely with a state fiscal monitor from the Department of Community Affairs since January.
“Although other plans have called for an emergency manager, our plan requires the state monitor to remain in place and continue to approve all hiring, firing, expenditures, and budgets, contracts with an override of both the mayor and City Council,” Guardian said.
