A bill intended to prevent Atlantic City casinos from appealing their property taxes would allow them to opt out of the financial agreement if casinos open in North Jersey.
The rescue package, the so-called PILOT bill, bars casinos from appealing their property taxes and allows them to make fixed payments in lieu of property taxes for 10 years. The bill passed the Senate by a 34-3 vote on March 14.
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But language added to the bill gives casinos the option to withdraw from the financial agreement and become subject to regular property taxation, if casinos open in North Jersey. That would put Atlantic City at risk of facing more casino property tax appeals that damaged the city’s finances over the years.
The paragraph allowing the opt-out was not in the bill when first introduced, but was added after an amendment from the Senate Budget and Appropriations Committee.
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Sen. Jim Whelan, D-Atlantic, said the language was added after some casinos made a request to the Governor’s Office. The request went through that office to Senate President Stephen Sweeney, who is the sponsor of the bill, Whelan said. The original PILOT was an agreement between the state and Casino Association of New Jersey, which backs the bill, Assemblyman Vince Mazzeo, D-Atlantic, said in January.
The Governor's Office did not return a request for comment and a spokesman for Sweeney declined to comment. Gov. Chris Christie recently said he won’t sign the PILOT bill or a state takeover of Atlantic City if they are altered in any way from the versions passed in the Senate.
“If both bills do not come to my desk in exactly their current form, I will not sign them,” Christie said Tuesday.
Proponents of the PILOT have said it will stabilize the city's tax base and “stop the bleeding” that has occurred from the casinos' successful tax appeals. The city's ratable base has plummeted from more than $20.5 billion in 2010 to $7.3 billion in 2015.
Voters will decide whether as many as two casinos can open outside Atlantic City in a referendum this November. Experts predict North Jersey casinos will further diminish Atlantic City’s gambling market. In 2013, a tax court slashed Borgata’s assessments after deciding the income approach to property valuation was the most credible, meaning the foundering local casino market was relevant.
Whelan, who voted for the bill, conceded that the language would allow casinos to appeal their property taxes if North Jersey casinos ate into their revenue.
“Yes. Absolutely,” Whelan said. “The effort here has been to strike a fair number that is predictable and stable and fair. And fair also includes fair to the taxpayer, which in this case is the casino. And if you have casinos up north, it’s a whole new equation.”
Atlantic County Republicans who have fought for changes to the bill described the new language as proof the bill unfairly benefits the casino industry.
“Where is the fairness for our hardworking Atlantic County families and retirees who also pay property taxes?” said Assemblyman Chris Brown, R-Atlantic.
“I want to ask the sponsors: how does this stop the bleeding?” Atlantic County Executive Dennis Levinson said. “Since when do the regulated tell the regulators what they want? I wish somebody would ask me how much in taxes I want to pay.”
Coincidently, the Casino Association of New Jersey issued a press release early Wednesday urging state lawmakers to enact bills to address the city’s financial crisis.
“The inability to enact legislation to address our region’s very unique situation has left city residents, the industry, and the hardworking families that rely on casinos and other city businesses for their livelihood in limbo with no path forward,” the statement said.
The Association did not immediately return a request for comment on the added language to the bill.
Atlantic City Mayor Don Guardian, who has advocated for the enactment of the PILOT bill, said he doesn’t like the opt-out language, but said the bill still redirects $110 million in casino tax funds over 10 years to the help the city pay down debt and expenses. It also locks in the casinos’ payment for last year, avoiding a loss in property taxes because of lower assessed values for some of casinos, Guardian said.
“It would only return that particular casino to the assessed value and make it pay the property tax it has to pay. The concerns we have, if the properties continue to go down, then so will the taxes because they’ll file tax appeals,” Guardian said.
The Assembly version of the bill does not contain the opt-out language, but hasn’t yet entered committee. Assembly Speaker Vincent Prieto has said the takeover bill won’t be voted on without changes to protect collective bargaining, and Christie has said he won’t sign the PILOT without the takeover.