Gov. Chris Christie signed the long-awaited PILOT bill, ending a long political battle over Atlantic City's financial difficulties. The day before the New Jersey State Senate and General Assembly each passed the PILOT bill with overwhelmling majorities. The two-bill recue package for Atlantic City was veto-proof, making it all-but-inevitable that Gov. Christie would sign the bill into law.
The bill gives Atlantic City a temporary reprieve from state control, but New Jersey's administration still has the potential for tremendous sway over the future of the city. If New Jersey does not like the plan Don Guardian and the city council draw up, the state government can take control of the city's finances. Also, if at any point in the next 5 years the state believes that Atlantic City is misusing city funds, New Jersey can take control of the city's finances.
150 Days to Get Their Act Together
Gov. Chris Christie spoke tough words at his press conference announcing the signing of the bills, putting the city on warning that they must get their house in order.
Christie said, "For Atlantic City officials, the final countdown starts today. They now have 150 daysto develop and implement fiscally responsible reforms and finally meet the obligations of every other municipal government in our state."
Terms of 1st Bill Signed
Provisions of the first bill keep Atlantic City from bankruptcy for the next 150 days, until late-October. With Atlantic City entering the summer phase of operations, the city has nearly 5 months to turn around its finances and create a plan for getting the city out of it financial crisis. That might be easier said than done, though.
Under terms of the new law, the state of New Jersey is giving Atlantic City as $60 million loan, which will keep the city government operating for the next several months. Meanwhile, Mayor Don Guardian and other city leaders must figure out a way to trim $80 million from the city's yearly budget.
Terms of 2nd Bill: The PILOT Bill
The second bill is the PILOT bill -- PILOT is short for "Payments in Lieu of Taxes" -- which creates a rigid fee that Atlantic City casinos can pay, instead of their assessed taxes. The PILOT bill does a couple of things for the state and Atlantic City.
On the one hand, the PILOT payments circumvent the need for costly legal battles over tax assessments every year. It has become a yearly ritual for the casinos of Atlantic City to file appeals on the taxes they are assessed. These appeals pit the state versus the casinos, which can rack up millions of dollars in legal bills, when 8 casinos are appealing their taxes. The new law is a win-win for both parties, though it is a loss for the legal teams on both sides.
$120 MIllion a Year in Taxes
Under terms of the PILOT bill, the casinos will pay a set amount of $120 million a year for the next 10 years. This has the additional advantage of giving casino executives a stable figure they can use to figure business costs over the next decade.
There had been some question over Gov. Christie would sign the PILOT bill in the weeks before the legislature passed the measure. State lawmakers introduced the PILOT bill in late 2014, but Chris Christie twice vetoed similar bills. Consistantly, Christie has sought to impose more rigid controls over the city's finances.
Sweeney and Prieto
This time, he gave Atlantic City one last chance to get its finances in order. Senate President Stephen Sweeney appears to have found the right formula in providing for a 150-day bill, because it left the door open for Christie to take strong measures later.
The head of the State Assembly, Vincent Prieto, had sought a 2-year buffer for Atlantic City, but Sen. Sweeney preferred a much short time frame. Sweeney originally had called for a 130-day window. Eventually, the Sweeney Plan largely won out, producing the bills which were signed on Wednesday last week.
