Monday, May 17, 2021
On May 5, with no fanfare, Assemblyman John Armato quietly introduced a bill to amend the Casino Property Tax Stabilization Act, commonly referred to as the Casino PILOT (Payment In Lieu of Taxes) bill. The PILOT, sponsored by Armato’s colleague, Assemblyman Vince Mazzeo, was signed into law in 2016 as a 10-year plan to stabilize taxes.
“It’s interesting that this bill to amend the PILOT has been kept under the radar when it could have such a significant and devastating impact on property tax relief,” stated County Executive Dennis Levinson. “My concern is for the non-casino businesses and taxpayers of Atlantic County who will once again bear the burden of this flawed legislation.”
The amount of money the casinos currently pay, as per the PILOT, is based on gross gaming revenues that include lucrative proceeds from Internet casino gaming and sports betting. Armato’s bill would remove both from the calculation of revenues in 2021 through 2025.
“Ironically, the casinos were the ones to insist the PILOT include language about gross gaming revenue and how it would be calculated and now they find their system is somehow inadequate,” said Levinson.
According to the bill, “the Legislature is concerned that the impact of the public health emergency limitations on Atlantic City’s casinos will affect the finances of the casinos for the foreseeable future, impacting their ability to pay the required PILOT payments.”
But Levinson noted the recent positive revenue reports for Atlantic City’s casinos.
Based upon its filings, the New Jersey Division of Gaming Enforcement found Atlantic City’s nine casinos generated 32.3% more revenue in the first quarter of this year than last year prior to COVID-19, including $311.2 million in Internet gaming and $189.3 million in sports betting. The positive news continued in April with Internet gaming bringing in nearly $108 million in just one month.
The original PILOT bill removed $3 billion from the county tax base. Atlantic County fought to get the promised 13.5% of annual casino payments rather than settling for the 10.4% that was later offered. The difference equated to nearly $40 million for the county and its taxpayers.
“It cost us $300,000 in court fees but we persevered and won a settlement to ensure our fair share,” stated Levinson. “Now Armato, and I assume Mazzeo, want to change the terms of that agreement without ever discussing it with those it impacts, other than the casinos. Where is the fairness in that?”
Levinson further questioned, “If this legislation is in the best interest of all Atlantic County residents, why aren’t Armato and Mazzeo, who are both running for reelection, publicly touting its merits? I’ve not read or heard anything about this from either one. We learned about the bill on our own.”
“The PILOT was basically written by and for the casinos and this amendment appears to be no different. It will benefit the casinos at the expense of the non-casino taxpayers by removing a huge and steadily increasing portion of the revenues and capping the base amount at $135 million a year, down from $150 million in the original bill, regardless of how high the gross gaming revenues may climb. The loss in property tax relief could be millions of dollars.”
According to Levinson, the PILOT was a bad idea but the settlement was agreeable to all parties and approved by Governor Murphy.
“Now five years into the bill, Armato and Mazzeo want to makes changes,” he said. “The settlement was made in good faith before the Superior Court of New Jersey with the understanding that all parties would uphold their commitments and live up to their obligations. I don’t think our taxpayers want the county to go back to court.”
Levinson also found it curious that the amendment will require the casinos to pay a combined $45 million a year through 2026 to Atlantic City, which just so happens to be under a state takeover that Mazzeo would like to see extended another four years. His bill to provide an extension was introduced about the same time as Armato’s PILOT amendment.
“What about Atlantic County’s other 22 towns, its non-casino businesses and taxpayers,” asked Levinson. “I don’t see our assemblymen introducing legislation like this for them. They must be aware of the impact the casinos had on the rest of the municipalities, especially the designated growth communities of Egg Harbor Township, Galloway and Hamilton Township, that had to provide new schools, infrastructure improvements, additional teachers, police, fire and more.”
The county executive acknowledged he is a strong proponent of the casinos and the tremendous economic impact they bring to Atlantic City, Atlantic County and the state.
“We want the casinos to survive and thrive,” he said, “but no industry should do so at the expense of the taxpayers. Unfortunately, that is exactly what this amendment proposes to do.”