Part of a proposed overall plan to help turn around the fortunes of beleaguered Atlantic City could include a new casino tax plan tying casino taxes to gambling revenue, state officials announced.
Two Democratic state lawmakers have proposed legislation designed to stabilize the finances of Atlantic City by setting casino tax rates. The plan—released by New Jersey State Senate President Stephen Sweeney and State Senator James Whelan—would create a two-year Payment in Lieu of Taxes program in which the city’s casinos would pay a combined $150 million in taxes annually for two years.
Each casino’s contribution would be determined based on property size, the number of hotel rooms at each and the annual gambling revenue won by each casino.
The legislation expands on a plan suggested by Sweeney earlier this year.
“My plan is designed to protect Atlantic City from bankruptcy and position the city for future economic growth,” Sweeney said. “With the multiple casino closings and competitive pressure in the gaming industry, Atlantic City is facing an unprecedented economic challenge. We need to take immediate action to stabilize the existing workforce, the casinos, property taxpayers and the entire community.”
Whelan said the plan will inject “more predictability” into the city’s finances, which have been battered by numerous successful casino tax appeals in recent years. After the two years, taxes would be pegged to gross gaming revenue.
“If the win increases after two years, that number would go up. If it goes down, that would go down,” Whelan said.
The city reportedly charged $210 million in casino taxes in 2013, but the city has not collected that amount. The city is planning a tax sale this month, which includes back taxes for the closed Revel casino and two Trump Entertainment casinos.
After the initial two years, the city’s casinos would owe $120 million a year if Atlantic City’s annual gambling revenue is between $2.2 billion and $2.6 billion. If revenue falls between $1.8 billion and $2.2 billion, the payment would be $110 million. If revenue is between $1.4 billion and $1.8 billion, the payment would be $90 million, and if it falls below $1.4 billion, the annual payment would be $75 million.
Kevin Ortzman, president of the Casino Association of New Jersey, told the Associated Press that the bills would allow casinos to plan their finances effectively.
“Atlantic City needs this type of stabilization, which is critical to maintain the thousands of jobs and investment dollars in the market and enable further diversification to stimulate growth,” he said.
The plan would also use casino funds paid to the state Casino Reinvestment Development Authority—which funds development projects in the city, but also throughout the state—to be used to offset the city’s municipal debt. About $25 million to $30 million in CRDA funds would go towards the debt payments.
Whelan said the move would not affect any project currently being financed through CRDA and targets “uncommitted” money. But that aspect of the plan quickly brought criticism, since CRDA projects in the city are often seen as economic generators.
Assemblyman Chris Brown, a republican, told the local Press of Atlantic City that diverting CRDA dollars “is a short sighted, quick fix that effectively eliminates the one program that actually attracts new businesses and jobs.”
The proposed plan consists of a series of bills that would also:
• Create a new category of state education aid exclusively for Atlantic City. The move is designed to help offset a 32 percent falloff in assessed property values in the resort over the past five years.
• Require each casino to provide “suitable” health care and pension benefits to employees, though minimum standards were not spelled out. Healthcare has been a major sticking point in the bankruptcy negotiations for thee Trump Taj Mahal casino, which could close December 12. Sweeney has come out against moves by Trump Entertainment to strip workers of healthcare.
• Eliminate the city’s casino-funded marketing arm the Atlantic City Alliance. The agency spends $30 million a year to market the resort to other parts of the country. A commission appointed by Gov. Chris Christie has proposed using that money for a public-private development corporation to drum up new business in Atlantic City, according to the AP.
The proposed bills come after New Jersey Governor Chris Christie, a Republican, has held two summit meetings of business and community leaders to devise strategies to help the struggling resort. The city has seen four casino close this year and its gaming revenue has been declining steadily in the face of competition from new casinos in neighboring states.
A spokesman for Christie told the AP that the bills are a welcome part of what will be an ongoing discussion of how best to help Atlantic City.
Atlantic City Mayor Donald Guardian, however, said he intends to introduce his own plan to stabilize the city’s finances.
Meanwhile, a coalition of the state’s federal lawmakers led by Democratic U.S. Sens. Cory Booker and Robert Menendez and U.S. Rep. Frank LoBiondo (R-2nd Dist.) sent a letter urging the federal government to fast track a grant application to provide emergency aid to thousands of workers who have lost their jobs due to casino closings in the city. The emergency grant would fund training programs for laid-off casino workers.
