ATLANTIC CITY — Property taxes here are going up this year by a substantial amount — $676.50 on a $150,000 home — even though the city, county and school district all have announced stable budgets.
A loss of property value, and the end of millions of dollars a year in tax-appeal refund credits from the county to the city have conspired to create the situation, said Atlantic County Tax Administrator Margaret M. Schott.
She and her staff were surprised when they worked up this year’s numbers, she said.
Most people don’t know about it yet, as quarterly tax bills haven’t been mailed. They should arrive in people’s mailboxes in the next two weeks, according to the city Tax Collector’s Office.
“It’s not a marginal tax increase. It’s going to hurt some people,” said Bill Heaney, an out-of-state resident who has owned a two-bedroom, two-bathroom unit at the Berkeley Condominiums in the Chelsea section as a vacation home since 2014.
He and wife Stacy discovered their 2019 tax bill was about $800 higher than last year’s when they went online to pay their quarterly tax bill last week. Their taxes are going up from about $7,500 a year to roughly $8,300, he said.
The biggest increase is in county taxes, up 20 cents per $100 valuation, or $373.50 on a modest $150,000 home in the resort.
It’s happening in spite of the city’s share of the county tax burden decreasing. A loss of $358 million in equalized value from successful tax appeals and sales data adjustments brought the city’s bill for county taxes down to $11.8 million this year, from $13 million in 2018.
But last year, the city had a $7.1 million credit to offset its county tax bill, so only about $6 million was actually billed to taxpayers, said Keith Szendrey, assistant to the tax administrator.
This year, the refund from the county was only about $300,000, so the city’s final bill was much higher at $11.4 million, he said.
A spokesperson for the state Department of Community Affairs, which oversees the city’s finances, said Friday it is calling for a joint task force to coordinate and reduce taxes. It is inviting Atlantic County Executive Dennis Levinson, New Jersey Department of Education Commissioner Lamont Repollet, and the Atlantic City Board of Education to join DCA and city elected officials in the effort.
The spokesperson said the municipal tax rate is the only one it has control over, and that the municipal portion of property taxes did not go up. DCA oversight decreased the municipal tax rate by 11.4 percent in 2017, and kept it flat in 2018 and 2019.
Mayor Frank Gilliam Jr. did not respond to multiple attempts to reach him for comment.
Council President Marty Small Sr. said the city has continued to lose tax revenue because of its shrinking property base.
In 2010, the city had more than $20 billion in property value, according to state data. In 2016, when the state assumed fiscal oversight of Atlantic City, that base had shrunk to $6.5 billion. Last year, the city had less than $2.9 billion in property value, after the casinos were removed from the rateable base with the start of the payment in lieu of taxes, or PILOT, program in 2017.
That figure is down to $2.5 billion for Atlantic City in 2019.
The school tax bill of a resident in Atlantic City will increase by $297 for a home valued at $150,000.
The city’s school tax rate is up almost 20 cents on the dollar as a result of the reduction in the overall tax base of the city, Szendrey said.
The total school tax levy actually decreased slightly this year by about $300,000, Szendrey said. In contrast, the overall tax base decreased by about $400 million.
“The numerator got small, but the denominator got significantly smaller, which is why the tax rate went up,” Szendrey said, adding that is not something the school board has control over.
The school district this year approved a $186.6 million budget for the 2019-20 school year with an $87.8 million general fund tax levy that will be offset by about $45 million in funds from the casino PILOT agreement.
The county tax increase “looks shocking, but it’s only really a return to normalcy,” Szendrey said.
At 45.8 cents per $100 valuation in 2019 — up from 20.9 cents last year — the county tax rate for Atlantic City is in line with other municipalities, he said.
Atlantic City’s county tax rate remains the lowest of all 23 municipalities.
“Atlantic City has had an artificially low county rate because of artificially high credits as a result of appeals,” Szendrey said.
Republican Assembly candidates Phil Guenther, of Brigantine, and Atlantic County Freeholder John Risley, of Egg Harbor Township, blamed the PILOT legislation and said if elected one of their first priorities would be to introduce legislation to fix the PILOT law.
They are challenging Democrat incumbents Vince Mazzeo, sponsor of the PILOT legislation, and John Armato, both D-Atlantic, in this year’s election.
County Executive Dennis Levinson said the state should help city taxpayers deal with the higher bills.
“They saw this day coming. They are smart, but they didn’t do anything about it,” Levinson said of state overseers. “The state has to share responsibility here. You can’t put it all on taxpayers. They can’t absorb that.”
He said the city’s county tax rate is probably where it should have been for many years.
“Now they are paying their fair share without the county taxpayers kicking in $7 million a year for their tax appeals,” Levinson said.
Over the past decade, the county paid the city an average of $7.2 million a year in tax refunds, Levinson said.
The DCA spokesperson said the state also recognizes the need to expand home ownership and the city’s property tax base to keep taxes stable.
Heaney said the new tax bills will undermine the city’s attempt to market itself to homebuyers.
“If we make it unbearable for people to live in Atlantic City because of high taxes, it defeats the purpose of trying to make A.C. a destination for homes and vacation rather than just a gaming destination,” Heaney said.
Since the PILOT agreement with the city’s casinos began in 2017, gaming properties are no longer included in the city’s tax base. Only noncasino properties are assessed and billed for county taxes.
The 13.5% share of the PILOT payments made to the county is treated as revenue, as the state required, said Levinson. It it taken directly off the amount the county has to raise in taxes.
Staff Writer Claire Lowe contributed to this report.