Judge to Decide Lawsuit Opposing Casino Tax Break
By Seth Grossman
Eighteen months ago, Republican Governor Christie and most Republicans and Democrats in New Jersey’s State Senate and Assembly voted to give Atlantic City’s casinos a nine-year tax break.
Until then, Atlantic City’s seven casinos paid a big share of all increases in public school, county, and local government budgets. Last year the combined taxable value of Atlantic City’s seven casinos was roughly $3.2 billion. That is roughly 50 percent of the total assessed value of Atlantic City, and about 11 percent of the total values of Atlantic County.
Under the new Casino Property Tax Stabilization Act of 2016, those casinos will only pay 2 percent per year increases over what they paid in 2015. Every other property owner in Atlantic County will make up the difference for the next nine years.
This will hurt Atlantic City homes and businesses the most. Roughly 11 percent of Atlantic City properties already pay a PILOT, which is payment in lieu of taxes. They include the 109 shops and restaurants of Tanger Outlets The Walk, the big sporting goods store, and some 3,000 units of affordable housing. Only 39 percent of properties in Atlantic City will pay almost all future tax hikes.
Also, Atlantic City, while under state supervision since 2010, refused to balance its budget as required by New Jersey’s Local Budget Law. As a result, Atlantic City was $210 million in debt at the end of last year.
To make matters worse, the state let Atlantic City defer another $153 million of obligations during this big election year. Approximately $108 million tax refunds were given to property owners who were over-assessed in previous years, $38 million for unpaid contributions for employee health and pension benefits and $7 million for a supposedly deficit in operations.
If the nine-year casino tax break remains, that $153 million, plus interest, must be paid back in future years with tax hikes on the 39 percent of Atlantic City property owners who still pay regular taxes based on the values of their properties.
Last year, LibertyAndProsperity.com and three of its members, filed a lawsuit to knock out this casino tax break. This year, we were joined by the governments of Atlantic County, Absecon, Egg Harbor, Hamilton, and Weymouth Townships, Somers Point and Ventnor. The case was heard by Judge Julio Mendez in Atlantic City on Nov. 30 and will be decided shortly.
When British King Charles II and Parliament created the colony of “New Caesarea or New Jersey” in 1664, tax breaks like this were not permitted. Elected representatives could only “lay equal taxes and assessments equally to raise moneys or goods upon all lands”.
After independence in 1776, New Jersey replaced its British Charter with a new State Constitution. It left out the requirement that all properties be assessed equally. That was a big mistake.
New Jersey government became a swamp of corruption. Politicians routinely sold tax breaks for bribes and political support in return. That helped cause the economic collapse of 1837.
In 1844, New Jersey adopted a new State Constitution that again required all real estate to be assessed and taxed equally. For the next 120 years, New Jersey had no state sales tax, no state income tax, and affordable property taxes. We were one of the richest states in America.
Starting in 1947, we changed our State Constitution and again began to allow tax breaks. We now have tax breaks for veterans, farmers, and senior citizens. We also have tax breaks for economic development and developers of blighted areas.
Do Atlantic City’s seven casinos qualify for any of these exceptions?
Atlantic City’s casinos are now earning record profits, and are increasing in value. They are hardly blighted.
Tax breaks for economic development normally encourage developers to build something valuable on worthless land that isn’t paying taxes anyway. In this case, all seven casinos are already built and already valuable.
Never before did 61 percent of a town get tax breaks paid for by higher taxes on the remaining 39 percent.
Judge Mendez stated that he expects his decision to be appealed to the New Jersey Supreme Court no matter how he rules.
I hope the courts throw out this tax break for casinos. However, the main goal of Liberty and Prosperity is to promote the basic idea of liberty that is imbedded in our Constitution.
Government should apply the same rules equally to everyone – like a referee in a football game. Our mission to persuade voters to elect candidates who would never give out special tax breaks like this in the first place.
Seth Grossman is executive director of LibertyAndProsperity.com and its attorney in this lawsuit. The organization maintains a Liberty and Prosperity Facebook page. It meets for breakfast 9:30 am every Saturday at the Shore Diner in Egg Harbor Township by Parkway Exit 36. Seth Grossman can be reached at info@libertyandprosperity.org.
