Friday, January 20, 2017
On Tuesday, January 24, County Executive Dennis Levinson will present his 2017 budget message to the Board of Freeholders - that much is known. But what is not clear is whether the county’s tax rate will go up or down.
“The budget process is always complicated, but this year there are a number of factors yet to be resolved that will significantly impact our budget,” stated Levinson. “We prepare as best we can with a number of drafts based on varying circumstances.”
“What complicates things is not knowing if we will receive the previously agreed upon 13.5 percent from the PILOT legislation and if the equalized value of the county will continue to include the casinos,” he said.
For nearly a year and half prior to the May 2016 passage of the PILOT, the Atlantic County Mayors Association, the county freeholders, and Assemblymen Brown and Mazzeo agreed to the 13.5 percent. Once it passed, however, the 13.5 percent suddenly came into question. It was then learned that county taxpayers may receive only 10.3 percent of the $120 million yearly PILOT payment.
Senator Whelan suggested that the county would receive the 13.5 percent if it worked with Atlantic City to address its financial mismanagement by assuming several city administered programs such as home delivered meals, senior and disabled transportation, and some public health services.
The county is prepared to assume those services in 2017 but is waiting for city officials to sign the necessary contracts. The county also offered to provide solid waste and recycling services in addition to maintaining the city’s Municipal Utilities Authority in the public sector.
“The difference between appropriating just 10.3 percent and 13.5 percent amounts to approximately $4 million each year and $40 million over the 10-year life of the PILOT. Those additional funds will benefit taxpayers in each of the 23 municipalities,” explained Levinson.
According to the county executive, if the county receives the 13.5 percent from the casinos and the value of the casinos remains in the county equalized value, the county tax rate would decrease. But any other combination of the equalized value and percentage from the casinos would result in a county tax rate increase.
Just how the PILOT tax payment is to be utilized in the county budget is yet another unknown. The state has not decided if the payment will be pro-rated in Atlantic City’s quarterly tax payment and/or a direct payment from the casinos to the county.
Another complication in equalization is determining what portions of casinos are currently required to be assessed and what portions in the future could be assessed. Without that knowledge the Board of Taxation is unable to give the county an accurate account of equalized value, a key component of the county tax structure.
And then there is the impact of state legislation passed in January 2016 that requires constitutional offices such as the County Surrogate, Prosecutor, Clerk and Sheriff, to meet the 2 percent tax levy requirement. But the state has yet to provide the counties with information specific to this legislation they will need for their budgets.
Further complicating this issue is the Bail Reform legislation that became effective as of January 1, 2017 and has already added approximately $800,000 to the overall county budget due to staffing and benefit increases in the individual budgets of the prosecutor and sheriff, while the county is still required to meet its own 2 percent cap.
“We started preparing our 2017 budget five months ago yet are still unable to finalize it for these reasons,” Levinson stated. “It is extremely frustrating and due to no fault of our own.”
The county has preliminary budgets forecasted for approximately 10 years to help determine items like debt service resolutions, refinancing opportunities, potential impacts of retirements, union negotiations, and more. But its projections could not include the impacts of the PILOT bill and Bail Reform legislation passed within the last year.
“We will continue to fight for our fair, agreed upon share of the annual casino tax payments and for the value of casinos to remain as part of the county’s equalized value. In this way we can ensure that county taxpayers, like the casinos that negotiated their own 10-year tax freeze, reap some benefit from the PILOT legislation,” he said.