From Dennis Levinson, Atlantic County Executive: In the words of a Tammany Hall politician, “No man’s life, liberty or property are safe while the legislature is in session.” The casino PILOT bill demonstrates his point.
Officially known as the Casino Property Tax Stabilization Act, the PILOT bill does just that. It stabilizes property taxes for casinos at the expense of every non-casino property taxpayer.
Depending on the ratio in any given year, property owners could see a tax increase of five to 15 cents per $100 valuation each year for 10 years. Without the PILOT, there would be no county tax increase. This legislation is flawed, but it happened. Now, where do we go from here?
Opposition to the PILOT is not an issue of Atlantic County vs. Atlantic City. It is about property tax fairness, which the New Jersey Constitution demands.
Non-casino property taxpayers should not have to pay more because the casinos have their taxes frozen for 10 years. The PILOT removes the value of casino properties from the county tax base. The loss of $3.4 billion worth of ratables, or 10 percent, is financially disastrous for any community.
There are three ways to correct this. The first is to ensure that a minimum of 13.5 percent of casino PILOT payments is paid directly to the county to compensate for the share of county taxes they would otherwise pay.
Despite public promises and signed agreements, this percentage never made it into the final bill, but neither did the 10.4 percent the state offered. A difference of $40 million!
The second is to repeal the PILOT. Remember, no PILOT no tax increase. The need for the PILOT was always questionable. Reasonable casino executives said all they wanted was fair property assessments. The PILOT was considered necessary because the Atlantic City government raised casino property tax assessments to fund operational costs. But this is no longer the case since the state controls the city’s finances. But repeal is unlikely because somebody has to admit they were wrong.
The third option is to challenge it in court. A first-year law student would question its constitutionality, but can the people win against the special interests? As Justice Oliver Wendell Holmes said, “The Constitution says what we say it says.” Not very encouraging, but we’ll try anyway. Even if we lose, the depositions should be very interesting.
The Office of Legislative Services stated that the financial impact on county government was “indeterminate.” They also could not determine whether the PILOT payment would be greater or less than what would be collected without the PILOT.
Who in their right mind would enter into a 10-year agreement based on such uncertainties? You wouldn’t even lease an automobile without the terms and conditions clearly defined.
The casino operators are smart. Shortly after the PILOT bill passed, a half-owner of Borgata, recently reassessed at only $650 million, sold its 50 percent share to MGM for $900 million, which is not subject to property taxes for 10 years. Borgata’s owners protected their investors. Who is protecting us? They made sure they wrote into the legislation that it can’t even be reviewed until 2025!
Incredibly, one of the bill’s sponsors admitted it was drafted by the casino association.
How many homeowners would like to write their own property tax bill for the next 10 years?
All of this could have been avoided if the casinos were correctly assessed. Delaware, Nevada, Maryland, New York and other gaming states somehow assess their casinos fairly and don’t need a PILOT. Why do we need one in New Jersey?
Dennis Levinson, Atlantic County Executive.
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