Two New Jersey State senators—Senate President Steve Sweeney (D) and Sen. James Whelan (D)---have come up with a plan to stabilize Atlantic City’s struggling casinos after a string of closures earlier this year. The plan, developed by Senate President Steve Sweeney and Sen. James Whelan and approved by the Senate Finance Committee on Monday, would simplify the property tax bills for the remaining Atlantic City casinos based on their revenue, among other provisions to assist Atlantic City pay down its debt. As put my Sen. Sweeney, the bill is intended to address the “fiscal nightmare” that has become Atlantic City.
In 2014, Atlantic City casinos, including three casinos that closed just over half way throughout the year, paid $210 million in property taxes. In lieu of property taxes, the senate plan would have Atlantic City casinos paying $150 million for the next two years, and $120 million thereafter, assuming the city’s gambling revenue remains between $2.2 and $2.6 billion. If gambling revenue falls to between $1.8 billion and $2.2 billion, the casinos will owe $110 million per year; if revenue falls between $1.4 billion and $1.8 billion, casinos will pay $90 million; and if revenue plummets below $1.4 billion, casinos would owe $90 million per year in lieu of property taxes.
Fully one-third—four out of 12—of Atlantic City’s casinos have shut their doors this year. A fifth—the Trump Taj Mahal—is set to close on December 20, but may be saved if the legislation becomes law, according to Atlantic City Mayor Don Guardian. The tax bill includes much of what the proposed new owner Carl Icahn has been asking state and local governments to provide to the ailing casinos.
The $150 million payment in lieu of property taxes is approximately what the remaining eight casinos would pay under regular property taxes, according to Guardian. But this price is a fraction of the tax reimbursements that have been freely handed out to Atlantic City casinos over the years, with Revel Casino alone, which was open for less than 6 months, receiving $260 million.
Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: Is it too late to save Atlantic City’s casinos?
By: George Lynch
Follow BBNA on Twitter: @BBNAtax
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