ATLANTIC CITY — Attorneys for Atlantic County and a citizens group asked a Superior Court judge Thursday to strike down the state law that changed casino tax payments to a flat rate, even though the county is benefiting under the plan.
Ronald J. Riccio, attorney for the county, said Thursday during a hearing on the constitutionality of the agreement in front of Superior Court Judge Julio Mendez the law allows casino properties to make improvements without having to worry about the tax impacts.
The county claims the agreement is unconstitutional and does not meet federal uniformity code, which states businesses should be taxed the same way.
“This is something that should have been put up for a public referendum, but they knew they couldn’t get the voters to pass,” Riccio said during the hearing. “One of the issues with this legislation is that it was written by the casino industry. This sausage got made by the casinos and the lawmakers, not the people.”
Following more than 2½ hours of testimony, Mendez said he would review the arguments and rule in the future. Both Liberty and Prosperity, a constitutional advocacy group, and the county have sued the state to block the law.
“Every time you single out entities and provided them with something that is different than everyone else, it raises concerns,” Mendez said.
The casino PILOT program requires casinos to collectively pay $120 million this year instead of property taxes. But with higher than expected gross gaming revenues, casinos are expected to pay $130 million this year.
The measure was intended to stabilize the city’s tax-collection base, which had been fluctuating wildly after a rash of costly casino tax appeals. Those appeals led to a massive budget deficit and the eventual state takeover, which is about to enter its second year.
The county claims not receiving a 13.5 percent share of PILOT revenues will lead to tax increases. During the hearing, attorneys for the state said the county did not meet certain criteria for receiving the full share.
Despite their objections, the county received more in tax revenue from the casino industry than it would have under the traditional property-tax payment system, said John Lloyd, attorney for the state.
“The goal of the PILOT agreement was to bring stability to the city and prevent hundreds of millions dollars in tax appeals,” Lloyd said.
Under the traditional plan, the county would have received $11.3 million, but with the agreement, the county receives $12.4 million in tax revenue from the casinos. According to the county, the loss of ratable value caused by removing the casinos from the tax base lowered the resort’s share of county taxes by far more than could be corrected by only receiving 10.4 percent share of the funds. While the casinos paid more, the City as a whole paid nearly $5 million less in 2017, said Gerald DelRosso, county administrator.