'A good day for Atlantic City' as rescue bills advance
Atlantic City's long-awaited PILOT is one step closer to helping pull the casino resort out of its fiscal nosedive. On Thursday, the New Jersey Assembly voted in favor of accepting Gov. Christie's conditions on a package of bills - including a set payment in lieu of taxes by casinos and redirected aid for the city - aimed at keeping Atlantic City free of crushing tax appeals in future years.
Atlantic City's long-awaited PILOT is one step closer to helping pull the casino resort out of its fiscal nosedive.
On Thursday, the New Jersey Assembly voted in favor of accepting Gov. Christie's conditions on a package of bills - including a set payment in lieu of taxes by casinos and redirected aid for the city - aimed at keeping Atlantic City free of crushing tax appeals in future years.
But the Senate, which had scheduled a vote, delayed taking action on the bills, considered crucial to ensuring the resort's solvency.
The bills need to be approved by the Senate to be sent back to Christie's desk. The governor conditionally vetoed the long-sought tax-stabilization package a month ago, seeking added state control over the aid.
"This is a good day for Atlantic City," Assemblyman Vince Mazzeo (D., Atlantic), a sponsor of the bills, said in a statement after the evening vote.
State Sen. Jim Whelan (D., Atlantic) said of the failure of the Senate to vote: "The dialogue will continue, and I am hopeful that we can get them done and before the lame duck session is concluded." The Senate's next session is scheduled for Jan. 11.
Atlantic City is so dependent on this legislation that its state-approved $262 million budget for 2015 contains a $33.5 million line item called "Casino Redirected Anticipated Payment," or CRAP, as some in town affectionately, or perhaps desperately, call it.
"We need the money to balance the budget," Finance Director Michael Stinson said this week. He said the additional state controls in the new version were not a concern: "The state has all the control already."
One bill spells the end of the Atlantic City Alliance marketing group - the people who created "Do AC" - for the purpose of redirecting its $60 million funding over the next two years to the city itself.
But even with the partial legislative victory, the city was fighting a battle on another front Thursday as committees in both the Assembly and Senate approved differing bills calling for a referendum on ending Atlantic City's in-state monopoly on casinos and allowing two North Jersey gambling houses.
Local officials and legislators have objected strongly to the idea, and continued to do so at hearings Thursday, warning of dire, if not fatal, consequences for Atlantic City's economy.
And the city is also battling in court its most successful casino, the Borgata, staving off deadlines to repay money from the damaging tax appeals the PILOT legislation is designed to end.
According to Debtwire, the city received a temporary court reprieve on Borgata's attempt to collect on an $88 million refund, but still owes Borgata $60 million by Saturday.
The city's emergency manager, Kevin Lavin, has been in negotiations with Boyd Gaming, the parent company of Borgata, to resolve the debts.
Atlantic City has been on the brink of financial collapse since losing four casinos in 2014 amid a general downturn in total casino revenue.
Between 2010 and 2015, the city's property-tax base shrunk 64 percent, from $20.5 billion to $7.3 billion. The city is carrying about $397 million in outstanding debt, much of it owed to Borgata and other casinos from their successful tax appeals.
The cornerstone of the legislative package would require the casinos collectively to pay $150 million annually for two years to Atlantic City in lieu of property taxes. For the following 13 years, they would pay $120 million, though that could change based on gross gaming revenues.
The legislation initially called for the casinos to form a council that would determine how much each would pay the city, based on a formula enshrined in statute.
Christie's plan, approved by the Legislature, eliminates that council and requires the state's Local Finance Board, in consultation with the Division of Gaming Enforcement, to determine how much each casino must pay.
The division already regulates casino and track gaming revenues, and the Local Finance Board monitors the city's finances, along with the emergency manager, hired early this year by Christie.
The bills also redirect $30 million in an investment alternative tax paid by casinos to the Casino Reinvestment Development Authority to paying down Atlantic City's debt, and another $30 million in each of the next two years - the money authorized to fund the Atlantic City Alliance - toward plugging the city's budget gaps.
The governor is requiring that instead of sending that aid straight to Atlantic City, the casinos would give the money to the Local Finance Board, which would distribute the money to Atlantic City only after the city submitted a plan showing how it would "improve its financial condition and address its fiscal imbalance."
Mayor Don Guardian said the day after Christie's veto that he could accept the changes required by the governor. Mazzeo expressed disappointment with the veto, but later said the governor's changes had left the bulk of the bill intact.
City Council President Frank Gilliam said that he had concerns about the long-term implications of creating a fixed PILOT amount for casinos to pay, but that the city's dire financial needs outweighed long-term concerns for now.
"When you talk about locking an industry in at a particular number," Gilliam said, "I hope it is not one of these bills that destroy the city in the future."
Local officials have at various times questioned whether the city should reap a share of the luxury and room taxes that now go entirely to the state, and whether casino taxes and levies should be determined based on all revenues, not just revenue from gaming.
The rough dollar figures would not change under Christie's plan.
Christie also conditionally vetoed a bill under which revenue generated from a tax on gaming currently allocated to the Casino Reinvestment Development Authority would be redirected to Atlantic City for it to pay debt service on bonds it has issued.
The city's $262 million budget, which includes cuts to payrolls and departments but no tax increases, also defers nearly $40 million in employee health and pension benefits.
The city has been paying back the $88 million it owes Borgata in monthly installments of $150,000. The casinos have agreed not to file future tax appeals if the PILOT system is adopted.
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