A plan to make Atlantic City an Urban Enterprise Zone—where businesses would charge only half of the state’s sales tax—has advanced through a New Jersey Assembly committee.
Some Republican lawmakers, however, objected to the bill saying it was a “Band-Aid” approach to solving the city’s problems and a longer term comprehensive plan is needed.
UEZ zones are designed to encourage new investment and provide property-tax relief in struggling communities. Businesses in a zone can charge half thee state sales tax at 3.5 percent, which is designed to attract shoppers.
“This bill has been designed specifically to attract new customers and businesses to Atlantic City while at the same time giving incentives to businesses to hire local workers,” said Assemblyman Vincent Mazzeo, D-Atlantic, the bill’s sponsor.
Casinos, however, would not be eligible for the zone.
The assembly’s Democrat-controlled Commerce and Economic Development Committee approved the bill 6-3, with Republicans Anthony Bucco, BettyLou DeCroce and Nancy Munoz dissenting.
Bucco and DeCroce said the plan was a piecemeal approach toward solving Atlantic City’s economic crisis.
Bucco argued that one bill alone would not pull Atlantic City out of the “financial mess it’s found itself in.”
“It concerns me,” Bucco said. “I know there is a need for urgency, but there is also a need to take the time to get it right. I’m not sure the UEZ zone is the answer here. We just can’t throw things at this problem and hope for the best.”
Atlantic City saw four of its casinos close last year putting 8,000 workers out of jobs. That, as well as falling tax assessments at other casinos, has left the city’s government in a severe revenue shortfall.
New Jersey Governor Chris Christie has appointed an emergency manager to study the city’s finances an offer a plan—which could include bankruptcy—to save the city.
Meanwhile, a five-bill economic package that would allow casinos to make payments to the city in lieu of property taxes has been stalled in the Legislature following Republican opposition. Democrats say the plan would stabilize the city’s shrinking tax base, while some Republicans have called the plan a tax break for casinos.
This proposal would create a UEZ in Atlantic City for 10 years and a portion of the sales and use taxes collected in the zone would be used for property-tax relief in the city.
Separate from the committee’s vote, however, Christie has vetoed legislation that would have diverted 30 percent of the sales tax revenue collected in the state’s 32 UEZs to the communities where they are located.
In the past, UEZ sales-tax revenue was divided between the state and those communities, but since 2010 all sales tax revenue has been going to the state. In his veto message, Christie said the state could not afford to lose the UEZ revenue for the 2016 budget.
