In 2016, faced with a local government underfunded as a result of a number of casino closings and successful tax appeals, New Jersey lawmakers passed the Municipal Stabilization and Recovery Act which put the state in charge of Atlantic City. The takeover purpose was to control runaway expenses, high taxes and poor oversight by the city. To make it easier to change various departments, the act got rid of civil service protections.
The law helped right a floundering ship but expires at the end of the year. Atlantic County Assemblyman Vince Mazzeo has introduced a bill to extend the takeover another four years.
“I’ve always said self-governance is the goal, but we’re just not ready to give full control to Atlantic City,” Mazzeo told The Associated Press.
In exchange, the state will restore Civil Service rules, collective bargaining and government worker protections starting in 2022.
“Fire, police and all unions will have seat at the table now to negotiate the contracts,” Mazzeo said. “There is only a certain amount of wiggle room for negotiating contracts, but I think it’s time to let everybody get back to the table and negotiate. We are all in this together.”
The Assembly State and Local Government Committee, which Mazzeo chairs, expected to consider the bill May 12 without taking any action.
The legislation has the support of the local Police Benevolent Association, according to the Press of Atlantic City. Negotiations for a new police contract expect to begin after the summer in hopes salaries can be in line with surrounding communities.
“In terms of money, the average officer is down around $12,000, (compared to) 2011,” said PBA Local 24 President Jules Schwenger. “We’re the lowest paid in Atlantic County. We can’t go anywhere but up.”
Atlantic City Mayor Marty Small Sr. has asked for a 1.5 percent tax on sports betting sent to the city instead of the CRDA to alleviate the financial burden.
“It absolutely is a step in the right direction,” said Atlantic City Fire Department union President John Varallo, of getting civil service and PERC rights back. “It makes everyone have to play by the same set of rules and the same standards.”
Mazzeo said he worked with Governor Phil Murphy and State Senate President Steve Sweeney to craft the bill.
“For the past five years, public workers in Atlantic City have coped with demanding workloads, extended hours, and little resources to serve residents, all for lower pay compared to other municipalities in the state,” Mazzeo said. “The Covid-19 pandemic exacerbated these issues, as many public employees played critical roles in the city’s pandemic response.”
Atlantic City finances have improved so much, public workers should have their rights brought back. Between 2016 and 2020, the city budget declined 11.5 percent, and the number of staff fell from 994 to 889. Wall Street credit agencies have upgraded the city’s rating in recent years, according to the Associated Press.
For Mazzeo, it’s a balancing act to improve the salaries while not breaking the bank to pay for it all.
In addition to the takeover legislation in 2016, the state also approved the PILOT bill, which stands for payments in lieu of taxes. Instead of paying property taxes, the casinos over ten years, would make annual payments based on gambling revenue, the number of hotel rooms and the size of the property. The formula eliminated property tax appeals and allowed the city to know how much revenue was coming in.
The original payments were established at $120 million, with an increased scheduled for 2022. The growth of online gaming and the success of sports betting increased the revenue picture, thus increased the payments even though a major portion of the money from these sources go to third party operators like sportsbooks.
A second bill would take iGaming and sports betting out of the calculations.
Atlantic City Assemblyman John Armato’s proposal would amend the Casino Property Tax Stabilization Act to say, “Gross gaming revenue shall not include revenue derived from Internet casino gaming and Internet sports wagering during calendar years 2021 through 2025.”
The payments would increase or decreased base on factors such as financial performances of the casinos. In any case, the casinos would save money. By way of comparison, the total gaming revenue for 2020 fell 16.9 percent compared to 2019. But taking sports betting and online gaming from the equation and the decline was more than 43 percent, according to NJ Online Gambling.
What’s more, the sportsbook operators who reap much of the rewards don’t have to reinvest in the properties they’re attached to. They don’t pay $15 million to upgrade Ocean Casino Resort or $20 million at Hard Rock, or invest in Harrah’s, Bally’s and so on, said Joe Lupo, Hard Rock president.
The legislation also notes that since the initial bill, two new casino hotels have opened adding to the PILOT payments. The payment for 2022 would be $125 million with a maximum PILOT established at $135 million for the remainder of the program. However, each casino would also ante up another $5 million a year through 2026.
In other Atlantic City news, Borgata has agreed to a settlement with Ocean Casino Resort over stealing trade secrets and luring key employees away. MGM Resorts International, Borgata’s parent company, dropped litigation over the issue as a result.
A court filing gave no details of the terms of the agreement.
The lawsuit said one of the executives who left for Ocean was in charge of Borgata clients who spend $1.5 million to $4 million per visit or $25 million a year. Ocean has denied the accusations, according to the Associated Press.
“Ocean has agreed to honor Borgata’s restrictive covenants, including its non-compete, non-solicitation and confidentiality provisions that are designed to protect Borgata’s trade secrets,” MGM said.
