Atlantic City will move ahead with borrowing $103 million to pay casino tax refunds — if the local governing body supports it.
Atlantic City Council already agreed to handle the refunds as they did last year: by selling bonds. The move got a 5-0 approval Sept. 6. The state Local Finance Board also signed off on the city’s intended bond sale Sept. 12.
City Council’s second and final vote is scheduled for the next meeting 5 p.m. Wednesday on the second floor of City Hall, 1301 Bacharach Blvd.
The bonds don’t cover another $5 million or so owed noncasino property owners, which the city will pay as usual, said city Revenue & Finance Director Michael Stinson. cq
“The city is paying tax appeals to residents and other businesses ... as we speak,” Stinson said
Covering all $108 million in rebates with bonds likely would have meant more restrictions during the third year of financial oversight in Atlantic City by the state Department of Community Affairs’ Division of Local Government Services, Stinson said.
The Local Finance Board voted to extend supervision at its last meeting.
Tax appeal cases have financial repercussions beyond the rebates.
Case settlements since 2010 have reduced the city’s ratable base by about $4.5 billion ratable. That’s equivalent to $40 million less in tax revenue.
Atlantic City borrowed $35 million last year to pay tax rebates.
While all towns have been bombarded by appeals cases in the wake of the recession and housing market crash, the resort faces a more acute financial crisis because casino properties have accounted for such a high proportion of its ratable base — at one time, nearly 80 percent.
At their peak, casino operators found it more advantageous to base property values on land and improvements such as buildings and infrastructure. That changed when emerging competitor markets and the recession began hurting Atlantic City’s gambling industry. The companies instead sought assessments rooted in business performance.
Allowing that switch doesn’t happen for other taxpayers. The inequity sparked outrage among residents and local activists. Those reactions are compounded by the burden on noncasino property owners to make up for lost valuation caused mainly by casinos.
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