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N.J. Legislature puts new casinos on Nov. ballot

TRENTON - In what may be a watershed day for the future of Atlantic City, the Legislature voted Monday in favor of a proposed constitutional amendment to expand gaming to North Jersey, while the Senate also passed controversial legislation to take control of the resort town's finances.

A dealer runs a game of roulette at the Tropicana casino in Atlantic City, N.J. Figures released Monday March 14, 2016 show Atlantic City's casinos won $204.7 million in February 2016, an increase of 14.7 percent from Feb. 2015.
A dealer runs a game of roulette at the Tropicana casino in Atlantic City, N.J. Figures released Monday March 14, 2016 show Atlantic City's casinos won $204.7 million in February 2016, an increase of 14.7 percent from Feb. 2015.Read moreAP Photo/Wayne Parry

TRENTON - In what may be a watershed day for the future of Atlantic City, the Legislature voted Monday in favor of a proposed constitutional amendment to expand gaming to North Jersey, while the Senate also passed controversial legislation to take control of the resort town's finances.

Some lawmakers, as well as local officials, called the proposals destructive and vowed to fight them. Voters will get the final say on the amendment in November, amid what is expected to be a multimillion-dollar advertising campaign waged by supporters and opponents of casino expansion.

One bright spot, some said, was the Senate's near-unanimous vote to establish a payment-in-lieu-of-taxes (PILOT) system for the city's eight remaining casinos, which is intended to bring a modicum of stability to the city's tax base. The legislation, which Gov. Christie previously vetoed, would require the casinos to pay a collective total of about $120 million annually for a decade instead of property taxes.

"That's real good and stuff," said Mayor Don Guardian, a Republican who watched the proceedings from the Senate gallery. "Do I get an ice cream cone when I leave here, too? Maybe that'll make my day happy."

"This is a sad day," he told reporters.

The Assembly has not acted on the Senate's takeover or PILOT bills. Speaker Vincent Prieto (D., Hudson) says he opposes the measure because it would allow the state to modify or terminate existing labor agreements.

It also would authorize the state Local Finance Board to restructure the city's debt, eliminate agencies, and veto City Council minutes, among other things.

Guardian described the bill as "an insult to democracy" and laid blame for the city's woes on Christie.

"The failure that's occurring in Atlantic City is this governor, and for this governor to be proud that he's starving residents of New Jersey is just a disgrace. We can't wait for Jan. 1, 2018," he said, referring to the end of Christie's second term.

A Christie spokesman said the governor agreed with Senate President Stephen Sweeney (D., Gloucester) that greater state involvement was needed to fix "the serious financial issues that the city government refuses to address itself."

"If the Assembly does not want to advance the bipartisan plan supported by the governor and Senate president, that's the speaker's choice. But he will be responsible for whatever additional problems befall Atlantic City as a result of his decision," said spokesman Kevin Roberts.

The legislation was supported by at least one Atlantic County representative: Sen. Jim Whelan, a Democrat and former Atlantic City mayor. He said that if the state didn't pass the takeover and PILOT bill package, the city would go "into free fall" - bankruptcy or a bailout that's "most likely to come with a total takeover of city operations."

Wall Street ratings agencies have said the city could run out of money and default on its debts as early as April. It cannot file for bankruptcy without state approval.

The vote on the constitutional amendment came as no surprise, after Christie in January helped broker an accord with Prieto and Sweeney, who had sparred over its terms.

"There's a new world order when it comes to casino gaming, and we have to act to compete with the casinos in other states," Sweeney said in a statement.

The Senate passed it 34-6 and the Assembly 54-16 with three abstentions, surpassing the three-fifths threshold needed to put the question on the ballot this year.

New Jersey voters first approved casino gaming in 1976, when they supported a referendum that gave Atlantic City a monopoly on the industry on the East Coast.

The effort to expand gaming to North Jersey followed years of debate and gained traction even as four casinos closed in Atlantic City in 2014, and thousands of workers lost their jobs. Some analysts say casinos in North Jersey could force more to close in Atlantic City, though increased competition from other states could hurt the Shore town's industry as well.

The amendment would authorize the licenses for two casinos at least 72 miles north of Atlantic City, each in a separate county. The licenses initially would be available to operators who already hold licenses in Atlantic City.

Applicants would have to invest at least $1 billion in the "acquisition, construction, and development of" each casino. Developers who have expressed interest in North Jersey casinos but who don't currently operate in Atlantic City, such as real estate executive Jeff Gural and billionaire investor Paul Fireman, would be able to partner with existing operators.

Some of the tax revenue generated by the new casinos would be directed to Atlantic City for nongaming development. Revenue also would be dedicated to property tax relief as well as to the horse breeding industry.

If voters approve the amendment, lawmakers would then draft enabling legislation that would establish the tax rate on the new casinos' gross gaming revenues and their location.

Assemblyman Vince Mazzeo (D., Atlantic), who voted against the amendment, said it would further devastate Atlantic City's "fragile" economy.

"This debate shouldn't just be about gross gaming revenue," he said. "This has to be about people."

aseidman@phillynews.com

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@AndrewSeidman