presented: January 14, 2020
It is a pleasure to be here today to present the annual Atlantic County Budget Message. Let me get right to the point: Atlantic County remains in excellent financial shape. We have weathered the economic storm that challenged our area for more than a decade and did so with determination and resiliency. The county faced the seemingly intractable problems of high unemployment, record levels of home foreclosures, a shrinking tax base and the decline of our major industry, casino tourism. As County Executive I stepped outside of my core responsibilities and worked to create a shared vision and a strategy. A team was built and given the resources it needs to carry out that strategy.
As a result, our county emerged from an economically turbulent period to a safer, stronger and more financially secure future. Our opportunities are increasing. Yet we realize that our work is not done.
2019 was a year of significant accomplishments for Atlantic County. Many of the economic development goals and objectives that I’ve outlined over the past several years were achieved and have begun to bear fruit as we work aggressively to develop new industries, attract and retain businesses, and create good paying, secure jobs.
We established the Atlantic County Economic Alliance to serve as the lead agency for regional economic development. In a short period of time, it has become a driving force that is greatly respected by local, regional and national governmental agencies, as well as industry and academic leaders.
In 2019, we completed construction of a state-of-the-art first building at the National Aviation Research and Technology Park. The building is fully-leased with nine tenants. Interest in the park is strong and plans are underway to construct a second building.
The research park has been integrated into an Aviation Innovation Hub that synergistically links the research park with the FAA Tech Center, the Atlantic City International Airport and the surrounding one-mile area. The airport is an ideal location for air cargo and aircraft maintenance, repair and overhaul operations.
Atlantic County’s efforts have not gone unnoticed. The New Jersey Economic Development Authority has recognized us as a model for starting a new economic cluster. Industry has also taken notice. Boeing has expressed interest in Atlantic City International Airport for unmanned cargo aircraft testing. Other companies are interested in our facilities for radar and drone/counter-drone research, which could present a new specialty in aviation research.
We are working with the South Jersey Transportation Authority and the ACEA to attract Elevate Jet, a charter airline and aviation maintenance company, to the airport. If successful, this project could bring 180 new, high-paying jobs to the region within the next several years. It will also encourage other companies to look at the airport for maintenance, repair and overhaul work. Bear in mind that we are asking a company to relocate to a state known for a not so friendly business and tax climate and currently with no state incentives. To do that, we believe we have put together a solid offer that offsets those negatives and enhances some of the existing benefits the airport offers.
We applied for and were awarded a United States Economic Development Authority i6 Challenge grant to create a smart airport and aviation partnership that will test smart airport and aviation technologies. More than 180 organizations applied and we were one of a few successful applicants nationwide. We are in good company. Other recipients include Johns Hopkins University, Cornell University, and the Mayo Clinic. It also should be noted that the National Institute of Aerospace, an organization that works closely with NASA Langley and the FAA, asked us to be a partner with them on this grant. This should validate that our potential to develop an aviation sector is real.
We are actively involved in efforts to develop an Aviation Maintenance and Training Academy at the airport and are applying for a $4 million USEDA grant to fund a portion of the construction cost. Discussions are underway with Embry-Riddle Aeronautical University, considered to be the world’s leading aviation research university, to operate the academy. Embry-Riddle has helped develop a feasibility plan for the academy. This academy will be critical to the development of air cargo and maintenance, repair and overhaul operations at the airport and will also help train workers for the wind energy industry.
We are also working hard to strengthen and diversify our workforce. We are working with the County Superintendent of Schools and high school superintendents to implement an aviation science, technology, engineering, and math (STEM) program in our schools. The Atlantic County Institute of Technology is the first to offer the program, developed by Embry-Riddle. Three additional high schools in Atlantic County are expected to offer aviation STEM classes this fall. Successful student participants can earn a full semester of college credits and industry certifications prior to their high school graduation.
We were able to play a key role in critical economic development initiatives such as those I have just mentioned, and others such as the Stockton University Campus in Atlantic City, because of our strong financial position. Moody’s rated Atlantic County Aa2 and said, “the County has retained a stable financial position despite dealing with the fallout from the financial issues of Atlantic City...” Moody’s credited the county with strong liquidity, modest debt and pension burden, and strong financial management practices and policies.
Standard and Poor (S & P) rated Atlantic County as AA stable and noted our “very strong liquidity, strong budgetary flexibility, strong budgetary performance, strong debt and contingent liability profile, very strong management, and a strong institutional framework.” Our net debt, expressed as a percentage, is .47%. That is less than one half of one percent of our total debt capacity. We are in the top 18% of all counties in the country.
Further validation of our strong financial position is that we received our 20th perfect audit. In 2019, as we do on a regular basis, we changed auditing firms every three years to ensure that are operations receive a fresh, critical review. We believe that we are the only county in New Jersey that does this.
Based on the best information we have to date, our 202O county budget is $216,702,748. The amount to be raised by taxation is $151,571,082, effectively the same amount as last year. We anticipate little or no increase in the county tax rate. Our year-end budget surplus is a healthy $18.6 million.
This budget benefits from our successful legal challenge of the Casino PILOT law. As many of its original supporters have now come to realize, this misguided law was unfair to every non-casino property taxpayer in Atlantic County and inexplicably failed to guarantee the county a fixed percentage of the 10-year PILOT. Initially the state allocated us a paltry 10.4% share that could be amended annually. We insisted that a fixed 13.5% share of the PILOT was fair. Unfortunately, we had to spend $260,000 in legal fees to get what was reasonable and proper in the first place.
However, the cost to taxpayers for not challenging the law would have been much greater. The percentage difference translates into an additional $37 million over 10 years if casino annual gross gaming revenues remained between $2.2 and $2.6 billion. During the last three years, those revenues have been steadily increasing as a result of Internet gaming and sports betting. In 2019, the casino gross gaming revenue exceeded $3 billion. If these revenue numbers hold steady, the benefit to county taxpayers would be an additional $1.5 to $4 million per year over the remaining life of the PILOT.
As has always been our practice, we have held down any spending increases as much as possible. Fifty percent of the increase, over $700,000, are in areas mandated by the state. They include Harborfields and the Medical Examiner, as well as the three election offices (the County Clerk, Board of Elections and Superintendent of Elections) that must absorb increases for mail-in ballots, mailing services, and the mapping of election districts.
Also, our Meadowview Nursing and Rehabilitation Center will require an increase of $232,000 for costs associated with therapies, prescription drugs, temporary nursing service, and software licenses due to new reporting regulations.
With the efforts of our dedicated fiscal team and the cooperation of our Board of Freeholders, Atlantic County remains in outstanding financial shape. Our residents can be assured that we will continue to maintain our conservative fiscal policies and low debt so we do not place undue burden on our children and grandchildren. By diversifying our economy, we aim to provide greater opportunities and prosperity for future generations so that they will be able to live, work and thrive in Atlantic County. I believe 2020 will be the beginning of a new decade of economic transformation.
I am proud to be your county executive and appreciate your ongoing cooperation and support.