Wednesday, June 29, 2016

County's Share of Borgata Refund Results in Tax Rate Increase

Atlantic County recently learned that it must refund the City of Atlantic City an additional $3.3 million this year and $3.5 million next year for its $6.8 million share of Borgata’s successful $62 million 2009-2010 tax appeal.

The county had included $7.43 million in its 2016 budget for planned tax appeal refunds throughout Atlantic County. The ruling by the state Attorney General’s Office that it must provide an additional $3.3 million in refunds this year will require the county to increase its 2016 tax rate by 1.7 cents that includes the general purpose tax as well as library, public health and open space taxes.

“Unfortunately, the taxpayers once again take the hit,” said County Executive Dennis Levinson. “Our budget was adopted on March 22, 2016 with a slight decrease in the overall tax rate as well as a 1.2-cent decrease in the general purpose tax. With this latest development, the tax rate will now increase.”

After the Borgata won its 2009-2010 tax appeal in 2013, Atlantic City appealed the decision. It lost its case in July 2015 but never notified the Board of Taxation that the appeal was denied and the case was closed.

“Had we known at the time we were preparing our budget what Atlantic City evidently knew a year ago, we would have been better able to budget appropriately.”

According to Levinson, county budget officials prepared nearly a dozen draft budgets to address various scenarios while the PILOT legislation was stalled but without the benefit of this important information.

“We had no idea of the finalized amount of the Borgata settlement with interest. To add insult to injury, Atlantic City still owes the Borgata $88 million more in refunds for tax appeals from 2011 through 2014 that is excluded from the PILOT legislation.”

“It is interesting to note that Borgata is currently assessed for approximately $880 million, yet as soon as the PILOT passes and locks in Borgata’s taxes for 10 years based on $880 million, it sells a 50 percent share of its property for $900 million,” he added.

“If a system was in place to ensure that casinos, and all properties, were assessed properly this would never occur,” Levinson stated. “As it now stands, it is the municipalities that are responsible for assessing properties, not the county. The county has no input or recourse in this regard. I have been asking for countywide tax assessment for years, but to no avail. Only the state has the power to make that change through legislation. It is extremely frustrating.”

The new tax rate will mean the owner of a $200,000 home in a town with 100 percent equalized value will pay $6 more towards the general purpose tax.

“Although the tax rate will increase, the amount raised by taxation will not,” noted Levinson.

“As soon as we were notified by the state and adjusted our figures to account for the additional refund to the Borgata, we wanted to advise the municipalities and the public of what they could expect. No one wants to be the bearer of unpleasant news, but the taxpayers need to understand the reason for the change in the tax rate.”

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