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Atlantic City

Michael Ein

Casino revenue taxes are short of state projections by $11 million two months into a new fiscal year, and some officials say the state should adjust its expectation of how much money will come from the Atlantic City industry.

Services for senior citizens and disabled residents across the state may need to be curtailed or funded through other means if the revenue shortfall continues to the end of the year. In the past, those programs have been funded by casino revenue taxes, but the state has had to pull more money from the General Fund to make up the difference.

“I don’t know if the projections are going to be met,” said state Sen. Jeff Van Drew, D-Cumberland, Cape May, Atlantic. “It’s a bit of a reality check. It’s going to be very challenging to see significant increases of any kind.”

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Last fiscal year, gross casino revenue taxes shrank by about $4 million, or 10 percent, from the prior year. That continued a pattern of annual declines dating to 2006, according to the state Office of Legislative Services.

The trend was to have substantially reversed this year, with officials projecting growth of nearly 19 percent sparked by the opening of Revel and new marketing efforts by the Atlantic City Alliance, according to the state Department of Treasury’s Office of Management and Budget. But the $44 million in gross receipts through the fiscal year’s first two months missed projections by $11 million, or 20 percent, the Treasury says.

Casino taxes weren’t the only revenue source that missed the mark. Overall, total state revenue collections for the first two months of this fiscal year missed projections by $100 million, or about 5 percent. Nearly every category of revenue fell behind projections, including gross income and sales tax. Some officials said the expectations were unrealistic.

“The projections were very optimistic,” said state Sen. Jim Whelan, D-Atlantic. “The reality is the numbers are down.”

Casino revenue tax is the state’s sixth-largest source of revenue. By statute, the money goes to help finance services to seniors and disabled residents as part of the Casino Revenue Fund.

Mike Vieira, head of the Manville, Somerset County-based New Jersey Council on Special Transportation, said the Senior Citizens and Disabled Residents Transportation Assistance Program depended on the casino revenue tax, but due to its poor performance, his group lobbied the state to approve an additional appropriation of $2 million this fiscal year for the program to continue operating.

In light of weak Atlantic City gambling figures, he said he doesn’t foresee any improvement in the situation.

“We have to find another funding source,” Vieira said. “We hope there is one, but nobody’s jumping up and down telling us there is.”

Atlantic City is looking to differentiate itself by offering amenities that can’t be found in other casino markets, such its proximity to the ocean. Cultivating its resort offerings will help boost the region through job creation, increasing sales-tax collections and improving overall profitability for the industry, Van Drew said.

But it may have less of an effect on gambling revenue due to the intense competition and abundance of casinos in other jurisdictions, he said. So-called convenience gamblers will frequent casinos close to home rather than travel to Atlantic City to play, he said.

“There is only a certain percentage of the population, and that’s not growing,” Van Drew said of gamblers.

While casino tax collections fell below expectations, there were signs of improvement. Casino revenue taxes increased by 5 percent in August compared with the same month last year, “providing some hope that a pattern of annual declines ... may be ending,” David Rosen, budget chief for the Office of Legislative Services, said in a report to the Legislature.

August also was only the second time since 2008 that monthly gambling revenue increased year-over-year for the casino industry, according to the state Division of Gaming Enforcement. Much of the upswing was attributed to a particularly bad month last year, when Tropical Storm Irene swept through the area and cut the season short.

This year, with good weather on its side, the state collected $6 million more in gross casino revenue taxes in August than during the same period last year.

Assemblyman John Amodeo, R-Atlantic, said he believed it was early in the year and there was still time for the industry to improve despite the challenges.

“We’re not done in the year,” he said. “It’s still a tough time — there’s no question about it.”

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