The New Jersey State Legislature has approved COVID-19 tax relief for casinos in Atlantic City, despite objections that the tax breaks are unnecessary and that taxpayers would be left footing the bill.
S. 4007, sponsored by Senate President Stephen Sweeney (D) and General Assembly Majority Leader Louis Greenwald (D), passed the General Assembly December 20 by a vote of 47 to 21, after passing the Senate the same day 21 to 16. The bill now heads to Gov. Phil Murphy (D).
The bill would change the calculation of the casinos’ payments in lieu of property taxes (PILOT) each year under the Casino Property Tax Stabilization Act until 2026, thereby reducing the casinos' payments. The act established a 10-year PILOT program in 2016, which started in 2017, to help revive the casino industry in Atlantic City and stabilize the city’s finances.
The bill is expected to reduce PILOT revenues by $30 million to $65 million each year in calendar years 2022 through 2026, according to estimates from the Office of Legislative Services. The losses could be partially offset by other casino nontax payments of $5 million per year in calendar years 2024 through 2026 and the reallocation of a portion of investment alternative tax revenues, according to the office.
Supporters of the bill argue the changes to the PILOT program are needed to help the casinos’ finances, after being temporarily forced to close during the state’s public health emergency.
During a December 6 Senate Budget and Appropriations Committee hearing, Sweeney said that without the legislation, four casinos may close.
The legislation was supported by the Casino Association of New Jersey, which issued a statement thanking Democratic legislative leaders for supporting the bill’s passage.
The association said the amended PILOT program “will protect thousands of jobs and provide certainty and stability to the market.”
“Under the revised PILOT program, Atlantic City and Atlantic County will receive more tax revenue moving forward year over year from the casino industry, and the funding provided by the PILOT program will help improve Atlantic City’s infrastructure and create a safer community for visitors and residents. We look forward to Governor Murphy quickly signing this important legislation into law and we are committed to working to continue to revitalize our historic seaside destination resort,” the statement said.
Meanwhile, Peter Chen of New Jersey Policy Perspective issued a statement calling the legislation a “losing bet for New Jersey” that “deprives the state and its residents of much-needed public investments in schools, roads, services, and other building blocks of a strong economy.”
Notably, revenues were up overall for casinos in Atlantic City this year. Casino licensees in the third quarter of 2021 reported net revenues of $968 million and gross operating profits of $310.8 million, the state announced in November.
“Casinos already get special tax treatment through the 2016 [PILOT] law. This legislation accounted for fluctuating revenues by basing the PILOT amount on how much money the casinos brought in every year. Now, casinos are coming back for more, reducing their annual payments, as well as excluding from future calculations the fastest-growing part of their business: online sports betting worth more than $1 billion in 2021 so far,” said Chen, who submitted testimony in opposition to the legislation.