New Jersey: Atlantic City casino tax break bill appeals to be heard by state appellate court next week

2024-03-14

United States

Reading time 2:26 min

Atlantic County and the nonprofit Liberty and Prosperity will attend the state appellate court on March 20 in Trenton to argue that Superior Court judges were right when they decided that 2021 changes in casino PILOT (payment-in-lieu-of-taxes) rules violated county agreements and the New Jersey Constitution.

The 10-year PILOT bill, formally known as the Casino Property Tax Stabilization Act, was signed into law in 2016. The legislation directly ties the amount of property taxes owed by casinos to their annual gross gaming revenue.

In 2021, the law was amended. Among several modifications was the elimination of revenue from online casinos and New Jersey sports betting from the gross calculation. These amendments saved the casinos millions in PILOT payments, according to the lawsuit.

The county will receive roughly $18.3 million this year from the PILOT, up from $17.9 million in 2023. However, Atlantic County Executive Dennis Levinson said the county could be due an additional $14.1 million this year if the court rejects the state's appeal.

"If we are successful, the state will owe us $14 million," Atlantic County Executive Dennis Levinson said Monday, as reported by The Press of Atlantic City. He said the state seems to think that "because the county has been frugal and has again been able to lower property tax rates this year, it must not need the money."

Levinson said last week he expects the county’s 2024 tax rate to fall almost five cents, from 43.8 cents to about 39 cents per $100 of assessed property value. The county is raising about $6 million more this year from taxpayers in its $262 million budget set for a public hearing on March 26, but the rate is going down because the value of property in the county has gone up.

In 2022, Superior Court judges decided against the state in the two cases, which seek different remedies. In the county’s case, judges found the new PILOT law violated a 2018 agreement between the state and county.

In the Liberty and Prosperity case, the judge found that the amended PILOT law was constitutionally flawed in a way that favored casinos and disadvantaged taxpayers.

However, the new PILOT law has gone into effect while the state has pursued its appeals.

"The county’s argument is they should be getting a bigger piece of the pie, ours is there should be a bigger pie," Liberty and Prosperity founder Seth Grossman said. "We are saying the casinos should be paying more. There was a deal that allowed them to pay less than what their properties are worth."

Grossman added that it is unfortunate it has taken the Appellate Court so long to hear the case and that the Superior Court judges’ decisions were not allowed to go into effect while the appeals process moved forward.

"Now if the court rules casinos will have to pay retroactive money, it brings in a whole new dynamic that did not exist a year and a half ago," Grossman said. He expects casinos to argue it will stress the industry and lead to closures or job losses.


Liberty and Prosperity Founder Seth Grossman

In his February 2022 decision, Superior Court Judge Joseph Marczyk ruled the state violated the terms of a 2018 consent order between itself and Atlantic County when it enacted a new PILOT law.

In his August 29, 2022, decision in the lawsuit brought by Liberty and Prosperity, Superior Court Assignment Judge Michael Blee struck down the 2021 amendments to the original 2016 PILOT law. Blee said the changes were passed on dubious grounds and violated the state Constitution by giving casinos significant tax breaks to benefit the industry rather than for a public purpose.