The Payment in Lieu of Taxes or "PILOT" Plan for Atlantic City casinos is set to be voted on by the New Jersey legislature in the next few days. The bill is the latest attempt by the state government of New Jersey to bolster the Atlantic City gaming industry.
Senate President Steve Sweeney said he plans to do everything in his power to bring a vote on the PILOT bill in late-March. He also suggested that he would not call a vote, though, unless Governor Chris Christie signals his support. In other words, he and the other lawmakers want to be a assured of success before putting their name to a tax vote.
Win-Win Situation
The bill being portrayed as a win-win for both sides by proponents. The bill would set property tax payments by the New Jersey casinos at $150 million a year for 2015 and 2016. For the next thirteen years of the plan, the payments would be $120 million a year.
Those in favor suggest that the payments will avoid the yearly appellate battle over casino property taxes. Every year, the casino's appeal the size of their property taxes, running up legal bills for the failing industry and the state, as well. Under the plan, the money would be paid to Atlantic City. 13.5% of the tax revenue would go to Atlantic County.
Levinson Calls for Changes
Dennis Levinson, the Executive of Atlantic County, is calling for changes to be made to the PILOT Plan's basic structure. Levinson said that casino values totaling $3.7 billion will be taken off the county's books. He wants a stipulation inserted into the bill that would make it clear that casino property values would be used when determining what share of revenues each local municipality would receive from the tax revenues.
Levinson says the removal of the casino values from the county's books would affect all 23 municipalities in the county. Therefore, the New Jersey Division of Taxation should allow tax assessments of the local casino properties to stay in the ratable base.
Reports on AC's Gambling Industry
Several groups with a background in bankruptcy evaluation are compiling separate reports on Atlantic County's gambling industry. According to Sen. President Sweeney, the governor does not plan to take action (or a stance) until those reports are completed. Since Sweeney will not take action without Chris Christie doing so, it can be said that those studies must be completed before the issue can be resolved.
Whelan Supports PILOT Bill
State Sen. Jim Whelan, a Democrat from Atlantic County and the former 3-time mayor of Atlantic City, gave his support for the PILOT plan. He said the plan's primary goal is to stabilize tax rates.
Smart business people want to have as many factors controlled as possible. A stable market is a predictable market, so the gaming companies are likely to want to see established tax rates, to better help them plan their business operations months and years in advance.
Known Revenue Streams
This has a cascade effect, because financial institutions view matters the same way. If Atlantic City and its casinos have a set revenue stream, banks and other lending institutions should have more confidence when they loan those organizations money.
Sen. Whelan also suggested the end of the month was a good time table for a vote. That is a key date, because April 1 is when Atlantic City's owners must file any tax appeals to their property taxes for the past year. For that reason, gambling industry executives would like to see the PILOT plan filed before the end of the month.
Atlantic City Bailout
Atlantic City needs a bailout, because the casino gambling industry of the city has seen its worst downturn in its history. In 2014, the city lost 4 of its 12 operating casinos. One of the remaining casinos, Trump Taj Mahal, nearly closed its door on several occasions. The closings came after the city lost 45% of its gaming revenues from 2006 to 2013. Market saturation meant that gamblers from New York and Pennsylvania who used to gamble on the Boardwalk stayed in-state to play at the local casinos.
With more casinos on the way in the Philadelphia-area and in New York State, Atlantic City looks as if will have trouble maintaining the visitor levels it has now. Some in the state, including Steve Sweeney, have called for a North Jersey casino to be built, to help New Jersey compete with other states in the gaming market. Such a happening likely would spell ruin for Atlantic City as a gaming destination.
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