Why does Atlantic County government keep changing its story about this year’s county tax increase?
It is because the county is looking for a way to get a larger share of casino payments in lieu of taxes (PILOT) than it is due under the PILOT law that is in effect for the next decade starting this year. The county claims its fair share of the casino PILOT payments is 13.5 percent. It asserts this share is in line with what the county has historically received in casino property taxes.
But the 13.5 percent share that the county wants is the average of what it received in casino property taxes over the last 11 years. Eleven years ago Atlantic City had five more casinos than it does now and a tax ratable base of more than $20 billion versus its current ratable base of approximately $6.1 billion. Meanwhile, the 10.4 percent share that the state determined the county should receive is the average of the last four years, which takes into consideration the adverse effect that the Great Recession and casino competition in neighboring states have had on Atlantic City.
The state was clear with the county that the county would need to take on extra duties in Atlantic City to justify an increase to 13.5 percent share. However, the county thought taking over extra duties meant it would also get paid for those extra duties. As a result, the county’s position — essentially wanting to get paid to be a vendor to the city while also receiving a 13.5 percent share of the casino PILOT revenue — made it impossible for the state to agree to the increased share.
In May, the county asserted that a 10.4 percent share of casino PILOT payments would be less revenue than what it received last year in casino property taxes. The state quickly disproved the county’s claim by providing data that shows the county will receive nearly $12.5 million in revenue from casinos under the casino PILOT, which is approximately $520,000 more than it would have received if the casinos paid property taxes through the normal process.
With another claim discredited, county government then changed its story to blame the county tax increase on tax credits it owes Atlantic City. But those tax credits have nothing to do with the casino PILOT law. The reason the county owes the city tax credits is because the city, like all other towns in the county, collects the county tax for the county. Every year the county issues tax credits to every town in the county to account for the county’s share of property tax appeal judgments entered against the towns in previous years. Since the casinos successfully proved in a court of law that they were overpaying property taxes, Atlantic City is paying the casinos back the entirety of their refunds and the county has to pay the city back for the county portion of those refunds, which it does through tax credits to the city.
The tax credits the county owes Atlantic City would have been paid regardless and the county should have accounted for the casino tax appeal judgments in its budgeting. In fact, the state actually reduced the tax credits the county owes Atlantic City by successfully negotiating down property tax refunds to the Borgata Hotel Casino & Spa. Property tax appeal judgments and claims for the Borgata had totaled $158 million before the state and MGM Resorts International, which owns Borgata, settled for $72 million.
I hope I have set the record straight. The state is working exceedingly hard to stabilize Atlantic City’s finances not just for the betterment of the city, but also for the county, region and state.
Atlantic County government is widely regarded for its solid management, stable operations and budget responsibility. As such, I encourage the county to live up to its reputation and find ways to mitigate this year’s proposed county tax increase rather than finding ways to shift the blame.
Charles Richman, of Freehold in Monmouth County, is commissioner of the New Jersey Department of Community Affairs.