Casinos appeal taxes after deadlock on payment plan

ATLANTIC CITY - With legislation to end casino tax appeals and stabilize this city's finances languishing in Trenton, Borgata and others confirmed that they have filed, or will file, petitions to appeal their 2015 property-tax assessments to meet Wednesday's 5 p.m. deadline.

Successful tax appeals by the casinos have cost the city nearly $400 million in refunds since 2007, which has depleted municipal coffers and put the city in dire financial straits. Most of the refunds are being repaid with borrowed money.

Some casinos, such as Resorts, have settlement agreements with the city that restrict them from filing an appeal this year. But the decision by market-leading Borgata to file Monday starts the cycle all over again, since the other gambling halls typically follow it.

"We were hoping we would not have been required to file a tax appeal for tax year 2015, which would not have been necessary if the PILOT [payment in lieu of taxes] legislation was enacted," Tom Ballance, Borgata's president and chief operating officer, said in a statement Tuesday. "Unfortunately, the legislation is not yet in effect, and in order to protect our interest we were required to file by the April 1 deadline."

Borgata won an $88.25 million settlement last year from the city after appealing that year's taxes.

And Borgata filed a lawsuit March 20 to block Atlantic City from borrowing $43 million in the bond market to repay a state loan that was due Tuesday. The suit contends that the plan violates a city ordinance allowing the city to borrow up to $140 million to pay property-tax refunds, including the $88.25 million owed to Borgata. The new plan pays the state, but not tax refunds, the suit says.

Mayor Don Guardian declined to comment on the new round of tax appeals.

Meanwhile, state Senate President Stephen Sweeney (D., Gloucester), main sponsor of the PILOT program for the Atlantic City casinos - one of five bills that make up his Atlantic City recovery package - said he still refused to post the legislation, known as the Casino Property Taxation Stabilization Act, for a vote without a "definitive" nod of approval from Gov. Christie that he will sign it. State Sen. Jim Whelan (D., Atlantic) is the cosponsor in the Senate, while Assemblyman Vince Mazzeo (D., Atlantic) has sponsored an identical package in the lower house.

Sweeney and others who support the PILOT plan contend it will stabilize the city's shrinking tax base, given the loss of four casinos last year, and give the city some certainty in planning its annual budget by letting it know how much it will get from the casinos.

The 15-year PILOT program would allow the eight Atlantic City casinos to pay a collective sum of $150 million annually for the first two years, and $120 million for each of the next 13 years, instead of individual property taxes.

"I have gotten no indication from the administration one way or the other on whether they support these bills," Sweeney said in an interview Tuesday. "I can't risk a veto or conditional veto. Not on this one."

The Democratic-led Legislature has never overridden a Christie veto.

Kevin Roberts, spokesman for Christie, said the administration urged Sweeney on Friday to put the relief bills on the governor's desk.

"The governor looks forward to combining the efforts of the [city's] emergency manager with those of Mayor Guardian and the legislation proposed by the Senate president to bring real, long-lasting fiscal stability to Atlantic City," Roberts said via e-mail. "Anything less than a combined approach would, unfortunately, once again shortchange Atlantic City's future. The governor urges the Legislature to put just such legislation on his desk for signature."

Complicating matters is the 60-day report released last week by the emergency management team that Christie installed to provide a financial road map for Atlantic City. The report, while detailing the depths of the city's financial crisis and outlining the proposed recovery plans, stopped short of endorsing Sweeney's. Sweeney criticized the report for its lack of a plan of action.

The Senate president said he walked the bills to the governor's staff at 12:30 p.m. Tuesday, though "they've known about them since early November," when he introduced the package.

"The city [of Atlantic City] OKd my bills," Sweeney said. "Both houses passed them out of committee. But I can't get a 'yes' or 'no' from the governor. He won't commit to signing them."

Roberts confirmed getting the bills on Tuesday.

But key Atlantic County Republicans, who were originally blamed by Sweeney and the Democrats for not being on board with the PILOT, were now turning the tables. Local Republicans got behind the program in mid-February after the county was promised a larger share of tax revenue.

"Since when does the Democratic state Legislature decide not to pass something strictly if Christie signs off on it?" Republican Atlantic County Executive Dennis Levinson asked sarcastically. "The onus here is not on the governor. It's on the state Legislature. The real issue is maybe the votes aren't there."

Assemblyman Chris A. Brown (R., Atlantic), who put aside his own recovery plan when local Republicans decided to back the PILOT, said, "Enough already." Brown and Mazzeo are competing head-to-head in this year's elections, in which all 80 Assembly seats are up for grabs. He aimed his ire at Mazzeo, the Assembly sponsor.

"Obviously, the governor is not asking us to put the bill on his desk so he can outright veto it," Brown said. "But Mazzeo refuses to pass the bill, because he imagines the governor may veto it. That's absurd."

Mazzeo fired back Tuesday night. "Fact of the matter is, we want everyone in agreement with this bill, including the governor," he said. "I'm not stalling. Let's vote on it. I'm ready."

With no resolution on the PILOT, the casinos say their hand was forced. They argue the tax appeals are necessary to keep pace with declining property values throughout the city, and because their gaming income has substantially decreased from peak year 2006.

"The existing real estate tax system is not working because of the economic climate that has developed in Atlantic City," Kevin Ortzman, Caesars Atlantic City president, said in a statement on behalf of the Casino Association of New Jersey. Caesars Entertainment Inc. owns Bally's, Caesars, and Harrah's in Atlantic City. "Left unchanged, it is a severe threat to the city and industry's ability to sustain the job base and investment in the state.

"The proposed Atlantic City Stabilization Act creates a structure where the continued decline in property values would no longer directly affect the casino tax payments," he said. "Those payments to the city would be fixed, and therefore, the city's revenue stream would be immediately stabilized. In addition, the act provides a much needed certainty to the region's largest industry, and eliminates the need for yearly tax appeals, which are costly and inefficient."