Judge Julio Mendez will hear arguments this Thursday on whether limiting tax hikes for Atlantic City casinos violates New Jersey’s state constitution. The hearing is scheduled for 9:30 am this Thursday, November 30 in Atlantic City.
The law is being challenged by Liberty and Prosperity, a constitutional awareness group, together with Atlantic County and six local governments.
New Jersey’s Attorney General and Jeffrey Chiesa, the attorney appointed to manage Atlantic City during the State takeover are defending the law.
During May of 2016, Republican Governor Christie together with the support of most Republicans and Democrats in the Legislature adopted “the Casino Property Tax Stabilization Act”.
It lets Atlantic City’s eight casinos (including the closed Revel) pay a fixed amount in lieu of regular property taxes based on their assessed values and the spending needs of public schools and county, and Atlantic City governments.
Those fixed payments are often called “PILOT” for “Payment In Lieu Of Taxes”.
Atlantic City’s eight casinos currently own property assessed at roughly $3.2 billion. That is roughly half the total value of Atlantic City taxable real estate and about 11% of the county tax base.
Attorneys challenging the law claim it violates the “Uniformity Clause” of the New Jersey Constitution. That provision requires all real estate to be assessed using the same method, and taxed at the same rate.
They claim that the State Constitution was designed to prevent politicians from offering lower taxes to powerful and wealthy special interests with political interests. They also claim it is unfair to force other property owners in Atlantic City and the rest of the county make up the difference with higher taxes.
Seth Grossman, the attorney and executive director for Liberty and Prosperity claims non-casino property owners in Atlantic City will be hurt the most.
“Roughly 11% of Atlantic City properties already pay peanuts in lieu of taxes. If the casinos with 50% of taxable real estate are also exempt, only 39% of Atlantic City properties will have the burden of almost all future tax hikes”, Grossman said.
Grossman also claimed that because the state allowed Atlantic City to defer $180 million of current obligations onto future years, big tax hikes are planned for Atlantic City.
During the past seven months, Atlantic City borrowed $142 million to refund taxes it improperly collected from over-assessed properties during the past few years. It also was allowed to again postpone paying its $38 million contribution of employee pension and health care benefits that were due in 2016.
Atlantic City borrowed another $210 to fund deficits the city incurred while under state supervision between 2010 and 2016.
Grossman said the requirement that all properties be assessed and taxed equally began with the charters that created the original Jersey colonies in 1664.
Grossman admits that several exceptions were created since 1947.
We now have tax breaks for veterans, farmers, senior citizens, economic development and developers of blighted areas.
But Atlantic City casinos are now earning record profits, and are increasing in value. Are they blighted?.
Tax breaks for ‘economic development’ are given to build something valuable on worthless land that pays little in taxes anyway. However, Atlantic City’s casinos are already built, and already valuable!
“Never before did 61% of a town get tax breaks paid for by higher taxes on the remaining 39%.”
Grossman said that while he hopes to win the case, his group’s main goal is to raise awareness of the ideas of liberty that are embedded in our Federal and State Constitutions.
“Government should apply the same rules equally to everyone–like a referee in a football game. We want voters to again elect candidates who would never give out special tax breaks like this in the first place.”