There's a lot to dislike about the package of five bills intended to stabilize the Atlantic City casino market and government finances in the region, but then they address a crisis that threatens to turn a bad situation into something much worse. Sometimes the cure is nearly as unpleasant as the illness.
As some suggested early in the long, largely secretive process of forming the rescue package, the payments in lieu of taxes do look like a break for casinos. Instead of the $210 million that Atlantic City casinos were expected to collectively pay in property taxes this year, they'll pay $150 million. They'll pay that amount again in 2016 and then for the next 13 years the amount will drop to $120 million, adjusted for inflation and possibly for changes in gross gaming revenue as well.
One justification for this unusual tax approach is preventing perhaps two more casinos from closing. Another is ensuring a stable and predictable major revenue source for local government. Since five of the remaining eight casinos already had appealed their tax assessments this year, the city was unlikely to collect the full $210 million in taxes.
But 15 years is a long time, and depending on how tax appeals might have played out and how the gaming market might perform, the PILOT program could be a very good deal for the casinos or for local government. The casinos support it, so don't be surprised if they're the winners.
One of the five bills awards extra aid to Atlantic City schools, which is both needed and deserved. One redirects the $30 million intended for marketing the city toward helping fund its budget for the next two years, while another takes most of the Casino Reinvestment Development Authority's money and uses it to help pay down the city's excessive debt - both unfortunate but necessary redirections of funds.
The most troubling bill of the five seems intended to rescue not Atlantic City but casino-worker unions. It requires casinos to provide health and retirement benefits just for union employees on penalty of losing their casino licenses.
The bill stipulates such benefits must be "fully funded by employer contributions" and equal or better than what's "commonly provided to full-time employees by the New Jersey gaming industry." This seems like a product of the belief by some politicians, especially Democrats, that they can order markets to produce the jobs, wages and growth they decide is appropriate.
This bill could be a threat to Atlantic City's future. The failure of political leaders to make the state and city less discouraging to business investment was a key factor in the resort missing its big opportunity to become a tourism destination successfully competing with the multiplying convenience casinos in the Northeast. Let's hope they don't make that mistake again.
Overall, the process of devising the Atlantic City rescue was too closed, with no details for months and then the bills were submitted as a done deal to be rushed through the Legislature in a couple of weeks. That may be the only way it could be done, but maybe not.
Crisis management should get a bit of a break on second guessing, since big decisions often need to be made more quickly and with less information than usual. However, understand that changes of this political and economic magnitude might have unintended and unfavorable consequences. We hope they work as intended.