In an attempt to bolster Atlantic City’s eroding ratable base and rising property tax rate, the state Assembly passed a package of five bills Thursday restructuring the taxes paid by the resort’s casinos.
Under the bills, casinos will collectively pay $120 million to the city for 15 years, assuming annual gross gaming revenue stays between $2.2 billion and $2.6 billion. That payment will increase or decrease if revenues rise or fall significantly. Gross gaming revenue totaled $2.7 billion last year.
If the bills become law, casinos will be barred from appealing their taxes.
The Assembly also passed a bill sending the city $60 million in casino tax money the Atlantic City Alliance was scheduled to receive over the next two years.
A third bill redirects the majority of the development funds used by the Casino Reinvestment Development Authority to municipal debt service.
The Investment Alternative Tax money the CRDA will lose under the legislation totaled $24 million in 2014, according to the organization. It would instead help pay down the city’s $36 million in anticipated 2015 debt service.
CRDA Executive Director John Palmieri said this week his organization’s impact would be significantly diminished without IAT funds.
But Tom Ballance, the CEO of Borgata Hotel Casino & Spa and the chair of the ACA’s board of directors, backed the bills, saying that due to changing circumstances, “we must consider all options to stabilize Atlantic City, and resources must be redeployed.”
The package’s two other bills require casino workers to receive “suitable” healthcare and retirement benefits, and allow the city’s school district to receive extra funding if the state education commissioner deems it necessary.
“Dire fiscal circumstances require real and substantial action,” said Assemblyman Vincent Mazzeo, D-Atlantic, a primary sponsor of the package. “This legislation will stabilize the tax base and bring new investment and business to the region.”
Assemblyman Chris Brown, R-Atlantic, has been a critic of the package, but said he voted for it because it has the support of city and county administrators. Even so, he expressed doubts Thursday about its long-term effectiveness.
“In effort to move forward in a bipartisan manner, I set aside my grave concerns,” Brown said. “The PILOT will benefit a few casinos while exposing middle-class Atlantic County families to future tax increases, especially if there are North Jersey casinos.”
Atlantic City Mayor Don Guardian, a consistent PILOT support, offered a different take, thanking Brown and Mazzeo for their votes.
“It’s one of the steps that’s necessary to bring some stability to the budget and to taxpayers,” Guardian said of the Assembly’s action.
Regarding a casino expansion, Guardian said “there certainly is no consensus that the people are going to want a casino in North Jersey.”
He expressed hope that a reopened Revel could boost the taxes casinos will pay under the PILOT. And while praising CRDA projects, he said that new state tax incentives like those in the Economic Redevelopment and Growth Program, which offers as much as 40 percent back on a commercial project’s costs, will help make up for lost CRDA investments.
The legislation now moves to the state Senate, where it is scheduled for a June 25 vote.
Gov. Chris Christie has yet to explicitly state a position on the legislation. Of the five bills, only the one defunding the ACA passed the Assembly with enough votes to overcome an absolute gubernatorial veto.