With no movement in Trenton on a proposed Atlantic City casino tax plan, several Atlantic City casinos have filed tax appeals of their 2015 assessments to meet a state deadline.
The proposed tax plan—which is designed to stop constant casino tax appeals—would have the city’s casinos pay a set payment in lieu of taxes for 15 years. But as the city has struggled with its depleted finances, the measure has stalled in the state Legislature.
That left casinos without a current deal with the city on their 2015 tax assessments little choice but to file the appeals.
“We were hoping we would not have been required to file a tax appeal for tax year 2015, which would not have been necessary if the PILOT (payment in lieu of taxes) legislation was enacted,” Tom Ballance, Borgata’s president and chief operating officer, said in a press release. “Unfortunately, the legislation is not yet in effect, and in order to protect our interest we were required to file by the April 1 deadline.”
Tax appeals by casinos have been one of the major reasons the city finds itself in financial trouble and facing huge budget deficits. Successful tax appeals have cost the city nearly $400 million in refunds since 2007. Borgata won an $88.25 million settlement last year from the city after appealing that year’s taxes.
The city has been borrowing heavily to pay those refunds, and is still embroiled in a legal challenge with Borgata over payment of the casino’s 2014 refund.
But the PILOT program was supposed to stop all that, yet it remains mired in Trenton. Under the plan, casinos would pay a set share of $150 million in taxes for two years and $120 million for the next 13 years.
New Jersey State Senate President Stephen Sweeney, the main sponsor of the bill says he will not post the legislation—part of a package of bills focusing on the city’s finances—until he is sure it is supported by Governor Chris Christie.
“I have gotten no indication from the administration one way or the other on whether they support these bills,” Sweeney told Philly.com, the website for the Philadelphia Inquirer and Philadelphia Daily News. “I can’t risk a veto or conditional veto. Not on this one.”
For his part, Christie’s office has signaled that they want the PILOT program and full set of financial bills voted on and sent to him for signature. But, Christie has not said definitively he will sign them.
The confusion comes as Christie appointed an emergency management team to sort out the city’s finances. The team has issued a preliminary report that called for layoffs and budget cuts, but did not offer explicit recommendations. A full report is expected in June.
However, the preliminary report did anticipate the passage of the financial package by the state.
Christie spokesman Kevin Roberts told the Associated Press the governor wants to review all recommendations for the city and the legislative package together before making a decision.
“The governor looks forward to combining the efforts of the emergency manager with those of Mayor Donald Guardian and the legislation proposed by the senate president to bring real, long lasting fiscal stability to Atlantic City,” Roberts said. “Anything less than a combined approach would, unfortunately, once again shortchange Atlantic City’s future. The Governor urges the Legislature to put just such legislation on his desk for signature.”
Sweeney, however, called that “an empty and disingenuous gesture” as the bills were introduced more than five months ago and copies were sent to the Governor’s office.
“We shared the proposal with the administration more than five months ago before the plan was put into legislation, and we have repeatedly urged the governor to give the plan serious consideration and to support it,” Sweeney said. “But, until today, the administration has been publicly silent on the plan, and even now they refuse to provide the commitment of support that is needed to help restore confidence in the city’s financial condition. In fact, the half-hearted gesture only adds to the high level of uncertainty that has made the situation worse.”
Sweeney then hand-delivered more copies of the bills to the Governor’s office last week.
The situation has led to local politicians from both parties calling for a vote on the bill package. Atlantic County politicians—who had initial concerns about the bills—have also signed off on the bills after negotiating a suitable share of the casino taxes for the county.
It’s also clear that the city’s casinos support the legislation.
“The existing real estate tax system is not working because of the economic climate that has developed in Atlantic City,” Kevin Ortzman, Caesars Atlantic City president, said in a statement on behalf of the Casino Association of New Jersey. “Left unchanged, it is a severe threat to the city and industry’s ability to sustain the job base and investment in the state.
“The proposed Atlantic City Stabilization Act creates a structure where the continued decline in property values would no longer directly affect the casino tax payments,” he said. “Those payments to the city would be fixed, and therefore, the city’s revenue stream would be immediately stabilized. In addition, the act provides a much needed certainty to the region’s largest industry, and eliminates the need for yearly tax appeals, which are costly and inefficient.”
Meanwhile, the city did get some good news as it received a 60-day extension to repay a $40 million loan owed to the state. The loan is at the center of the dispute with Borgata over its 2014 tax rebate. The casino has sued to stop the city from issuing new bonds to pay back the loan rather than use a previous ordinance to issue bonds to pay back Borgata and other creditors.
Over the past five years, the worth of Atlantic City’s taxable property has fallen from $20.5 billion to $7.3 billion, and declined by 35 percent in the last year alone. Four of its 12 casinos shut down last year, putting 8,000 out of work. Casino revenue for the city has fallen by nearly half in the last eight years, from $5.2 billion in 2006 to $2.74 billion last year.
