By Steve Sweeney

Economic conditions in Atlantic City have only worsened since a second summit on the city's future was held in November. This crisis threatens the financial health of the city, the casino industry, and the region.

City officials, state legislators from both parties, the governor, the gaming industry, casino workers, and residents are working together toward a recovery. Atlantic City has great potential, but its economy must be stabilized and diversified.

We need to take immediate action to steady the existing workforce, the casinos, and the entire community. My plan is designed to protect Atlantic City from bankruptcy and position it for future economic growth.

The facts are stark. While Atlantic City's collective tax base was worth $20.5 billion in 2010, Mayor Don Guardian has said it's expected to sink to $9 billion next year and around $7 billion later in the decade. No other city in New Jersey has seen its total property value drop 55 percent in five years.

Four Atlantic City casinos have closed, and the financial crisis has resulted in lower tax assessments for the eight that remain. The $210 million in property-tax revenue generated last year is a thing of the past.

Under a payment-in-lieu-of-taxes (or PILOT) program I'm proposing, the casinos would make payments equivalent to what they would likely owe without a recovery plan. As the mayor said when he testified in support of the bills, the casinos' payments "would be comparable to what they would be paying if we did the assessment today."

The PILOTs would provide predictability by avoiding the appeals that often delay and decrease casinos' tax payments. The money would go to the city, the schools, and the county in the same proportion as current tax revenues. The legislation is intended to stabilize revenue collection and distribution so that there is certainty on both sides: for those paying the taxes and for the governments that depend on them to provide services.

My plan would help local taxpayers, city government, county government, the schools, and the casino industry that is so important to the regional economy. Everyone would be helped, and everyone would benefit by helping Atlantic City recover from the serious fiscal problems caused by the sharp downturn in the gaming industry and the resulting decrease in ratables and revenue. My plan wouldn't make all of the city's fiscal problems go away immediately, but it would help the city, local and county taxpayers, and the casino industry through the hard times. The legislation would:

Stabilize casino property-tax payments. The legislation would authorize payments in lieu of taxes of $150 million annually for two years and $120 million annually for three years thereafter. It would guarantee tax payments indexed to gross gaming revenues over the next 15 years.

This reflects casinos' financial obligation to support Atlantic City, the school district, and Atlantic County. It also provides certainty to the many state programs for seniors and disabled residents that depend on casino revenues and therefore the success of casino gaming in Atlantic City. Casino revenue supports many social programs, including property-tax relief, medical assistance, housing aid, transportation assistance, and other social services for elderly and disabled New Jerseyans. Stabilizing the financial relationship between casinos and the city will provide more certainty for funding these essential state programs.

Redirect taxes to pay Atlantic City's debts. The investment alternative tax - a levy of 1.25 percent on gross gaming revenues and 2.5 percent on Internet gaming revenues - would be used for this provision, saving residents $25 million to $30 million each year.

Redirect Atlantic City Alliance money. Funds formerly used by the alliance would also help offset the loss of property-tax revenues.

Reduce municipal administrative costs. The state can require city savings through its transitional-aid powers and under a memorandum of understanding with the city. The state would also take an active role in ensuring the financial stability of the school system, including proper oversight.

Require the gaming industry to provide worker benefits. Casinos would be required to provide a baseline health-care and retirement package for their employees.

All these provisions would sunset after 15 years, and after 13 years, a commission would be established to review the city's situation and determine its future needs.

Steve Sweeney (D., Gloucester) is the president of the New Jersey Senate. SenSweeney@njleg.org