Atlantic City saw the state Senate approve a financial aid plan for the resort last week, which sends the proposal back to Governor Chris Christie.
Christie had conditionally vetoed the rescue bills, but with the passage in the Senate and a previous approval in the state Assembly, the bills meet his conditions and will likely be signed by the governor.
Meanwhile, a plan to put a referendum before voters to allow two casinos to be built outside of Atlantic City remained deadlocked in the Statehouse.
For many in southern New Jersey—where casino expansion is opposed—that would be considered a win, win for the city.
The rescue plan bills fix a set payment in lieu of taxes (PILOT) for the resort’s casinos for the next 15 years, as well as redirecting various casino redevelopment and other funds to the city to help it pay down its massive debt. The PILOT plan aims to stop casino tax appeals, which have devastated the resort’s budget.
Christie has until January 19 to sign the bills or they will have to be reintroduced in the legislature during its next session.
Under the bills, the casinos would collectively pay $150 million for two years and then $120 million annually for 13 years in lieu of taxes. That payment is tied to gaming revenue and could fall. The plan would also mean the casinos could not appeal their taxes.
Another bill eliminates the Atlantic City Alliance, the city’s marketing arm, with its $60 million casino-funded budget directed to the state during 2015 and 2016, as recommended by Christie. Before Christie’s conditional veto, the money would have gone directly to the city.
Under Christie’s conditions, to receive the funds the city must submit a financial plan to the state Local Finance Board for approval. Resort officials have said they need the revenue to fill a $33.5 million hole in its 2015 budget.
A third bill would allocate the casinos’ Investment Alternative Tax (IAT), which funds the majority of the state Casino Reinvestment Development Authority’s budget, to pay the city’s debt. Atlantic City Mayor Don Guardian has estimated the city will receive about $15 million from the IAT, according to the Press of Atlantic City.
State Senator James Whelan, who represents Atlantic City and a primary sponsor of the bills, told the newspaper that the passage “marks real progress” for Atlantic City and Atlantic County.
“These bills are needed to bring fiscal stability to the city, the casino industry and the local economy,” Whelan said in a statement. “By bringing stability to local finances we will be better positioned to get Atlantic City’s economy to move forward, expand the ratable base and create good, well-paying jobs.”
The Senate voted on the bill despite the release of a draft report by state emergency manager Kevin Lavin, obtained by the Press, outlining possible alterations to improve the PILOT plan.
Lavin suggested amendments that would include allowing the state to decide every three years whether to increase the casinos’ obligations by up to $20 million. Another would set the “floor” of the annual collective payment at $120 million. A third would delay the implementation of the PILOT until 2016. The PILOT in its current form is retroactive to 2015, meaning the city could lose $3 million in property taxes collected by the casinos in 2015, the Press said.
But with the current state legislative session about to end, proponents of the plan pushed for the vote.
North Jersey Casinos
Meanwhile, both the New Jersey State Assembly and Senate plan to vote on separate versions of a measure to place a referendum before the state’s voters to allow two casinos to be built outside of Atlantic City in northern New Jersey. The votes are scheduled January 11, just days before the current legislative session ends.
The issue, however, has come down to a battle between each house’s version, with the main sponsors of the bills unwilling to accept the other’s proposal.
Senate President Stephen Sweeney sponsors the Senate plan while Assembly Speaker Vincent Prieto sponsored the Assembly bill.
The main difference between the bills is that the Senate version would require the two casinos to be built by companies already licensed in the state and operating in Atlantic City. Sweeney, a southern New Jersey politician, wants to protect Atlantic City and supports a connection between any new casinos and Atlantic City properties.
The Assembly version would allow one of the two new casinos to be developed by a new company in the state. This is seen as protecting proposals for casino projects in Jersey City and also the New Jersey Meadowlands that have already been announced, although neither plan specifically names locations for the new casinos.
The plans also differ on how much tax revenue from the new casinos would be directed to Atlantic City to help aid in its redevelopment. The Senate version allocates about 50 percent to the resort while the Assembly bill allocates about 35 percent.
Both sides say their bill is better for the state.
Sweeney told the Associated Press he has enough votes to pass his bill, but said Prieto doesn’t have the votes to get his Assembly measure passed. Prieto said he has more than enough support to get his bill passed Monday.
Legislators had tried to negotiate a compromise bill, but were unable to reach an agreement.
“I negotiate for a living,” Sweeney told the AP. “It’s what I do. But when the only things you want to negotiate over are the two things I said are not negotiable, then what’s to negotiate?”
Prieto said he will make no more compromises.
“This is something everyone can support,” he said.
Christie, who has been away from the state for months campaigning for president, returned to support Sweeney’s bill.
“It is disturbing that infighting within the Democratic Party over competing gaming bills may deprive the voters of the ability to consider this question in November,” Christie said. “Inaction should not be an option. Delay puts the expansion of gaming in peril. That is not in the interests of anyone in New Jersey, north or south.”
Prieto wasn’t happy with the governor’s stance.
“If Governor Christie had spent time in New Jersey, he would understand the facts and that the Assembly bill is the best one for the entire state,” Prieto said. “Governor Christie is failing to support the free market system and competitive capitalism. That’s somewhat surprising, considering his current focus.”
There are two ways a referendum can go before voters in November. The measure can be passed by a simple majority in both houses in two consecutive sessions, or it can be passed by a three-fifths majority in one session. Voters must approve the construction of casinos outside of Atlantic City, which requires a change to the state constitution.
With the houses voting on separate bills and the legislative session ending January 12, it seems likely that supporters will need the larger majority to advance a referendum. The measure is opposed, however, by most southern New Jersey lawmakers seeking to protect Atlantic City and a three-fifths majority will be a difficult sell for both plans.
On Friday, Hard Rock International and the Meadowlands racetrack, which have reached an agreement to build a casino at the track, issued a survey that claimed New Jersey voters were in favor of gaming expansion. Conducted by Hart Research Associates, the poll showed 60 percent of New Jersey voters would approve gaming expansion and more than half of them thought the Meadowlands was the place to put a casino. The survey showed a bias toward Preito’s bill because Hard Rock does not currently operate an Atlantic City casino, and would be barred from opening one in North Jersey by Sweeney’s measure.
“Senator Sweeney has shown great courage by taking on this issue and Speaker Prieto has shown willingness to compromise by agreeing to reduce the number of licenses from three to two,” said Jeff Gural, chairman of New Meadowlands Racetrack. “The good news is that the polling shows if the proposal is presented right on the ballot, the legislation would pass. However, there are certainly concerns, such as the current requirement for both proposed casinos to be operated by current Atlantic City operators, as well as the amount of money going to Atlantic City, which this survey discusses.
“Clearly the most important thing if we are going to be able to create jobs and billions of dollars in new revenue is that the language in the referendum is approved by the voters. 83% of respondents do not support the concept that both licenses have to go to current operators in Atlantic City. We have been advised that a legal challenge might also delay these two projects if that provision is included.”
But there may be other outside interests favoring Prieto’s bill, as well. Sweeney accused backers of Prieto’s bill of clearing the way for the return of Steve Wynn to New Jersey, a notion a Wynn spokesman did not disabuse.
“It seems shortsighted to limit the options available for future development of the industry, given that some of the top tier resort companies, such as Wynn, are not operating in Atlantic City,” said Wynn spokesman Michael Weaver.
Both houses held hearings on their respective bills last week. During those hearings, southern New Jersey business and political interests opposed expanding casino gambling, while those from the more populated northern part of the state touted the jobs and tax revenue they say the new casinos will provide, according to the AP.
Still, many analysts feel the battle has been tainted not just by regional interests, but also the upcoming 2017 gubernatorial election. Sweeney, Prieto and Jersey City Mayor Steve Fulop—where venture capitalist Paul Fireman has proposed a better than $1 billion casino project—are all contenders for the state’s democratic nomination.
Fulop was joined by the mayors of Newark and Patterson—representing the state’s three largest cities—early last week and voiced their support for the assembly plan. Newark has also been mentioned as a potential site for a new casino. The Senate version picked up the support of several of the state’s labor unions through the New Jersey State Building & Construction Trades Council.
Sweeney says if the bill doesn’t pass this session, it’s dead. While conceding it could be brought back in the future, he believes the opportunity is today.
“I can’t say it won’t ever happen, but by 2018, New York will have approved a casino in Staten Island,” Sweeney said. “It needs to be now because we have the opportunity now.”
