An intra-government fight lasting three years ended recently, one in which all three combatants represent the interests of people in Atlantic County.
That’s reason enough to welcome the agreement between the state and Atlantic County on the county’s share of casino tax payments in lieu of taxes, the PILOT provision in the state’s takeover of Atlantic City government finances. The deal looks fair, too, with each side compromising on the amount.
Years of overspending by Atlantic City as casino tax revenue declined due to regional competition left the city essentially bankrupt. Since a big part of that revenue decline came from falling casino property values and subsequent tax appeals, state officials crafted an agreement in which casinos would cease their tax appeals and collectively pay $120 million a year in lieu of regular property taxes.
That aspect of the takeover had barely been agreed to in January 2015 when former Mayor Don Guardian and Atlantic County Executive Dennis Levinson announced the county would get 13.5 percent of the casinos’ PILOT payments. Their intent was to reassure taxpayers that municipal and county taxes wouldn’t jump as a consequence of the city rescue package.
But by summer, it became clear that legislators and the Christie administration saw the county-city split of the casino payments as not only yet to be determined, but contingent on how much Atlantic County helped its largest city recover. How Guardian came to announce the unauthorized and premature 13.5 percent share has never been explained publicly.
This was reflected in the final Atlantic City rescue legislation, which included the figure in accompanying comments but pointedly left it out of the law itself. The late Sen. Jim Whelan said a fair share for the county would be about 10.4 percent unless the county did much more for the city.
The county sued, arguing the PILOT agreement was unconstitutional and pressing the state to commit to a 13.5 percent share. Levinson said that would give the county $4 million to $5 million more per year compared to a 10.4 percent share.
Toward the end of April, the county and state reached an agreement, and soon after the six municipalities that had joined the county suit agreed to the settlement terms. Atlantic County will receive 13.5 percent of the PILOT payments for six years, from 2019 through 2024. It will keep the 10.4 percent it got for 2017, and receive 12 percent in 2018 and in the last two years of the PILOT in 2025 and 2026.
As a result, the county will receive about $37 million more from the PILOT over 10 years, and the city the same amount less, than they would have received if the county share had stayed at the state-set 10.4 percent.
The advocacy group Liberty and Properity — whose lawsuit against the PILOT for other reasons had been consolidated with that of the county — dropped its suit, saying the group couldn’t afford to keep the legal fight alive on its own.
All of the parties to the final PILOT-share deal should be satisfied that they’ve reached a financial arrangement that works for the county, city, municipalities and state.
With this distraction behind them, they can better focus on bringing spending at all levels in line with the reality of tax revenues and doing what they can to ensure the city and countywide economic recovery lifts all boats, including theirs.