New Jersey Senate President Steve Sweeney has proposed a plan to bring financial stability to Atlantic City and lay the foundation for future economic growth that includes a financially-healthy gaming industry as well as other attractions as a “destination” resort city.
The proposal comes in advance of a summit scheduled Wednesday that will bring together government officials, community leaders, business and the city’s workforce.
It is the first meeting to be held in the wake of multiple casino closings this year which includes the Atlantic Club Casino, Caesars’ Showboat Atlantic City, Revel Casino Hotel, and Trump Plaza, while Trump Taj Mahal could be closed in the next month.
“This is a plan to protect Atlantic City from bankruptcy and position the city for future economic growth,” said Senator Sweeney. “With four casinos already closed and one likely to close by the end of the year, Atlantic City is facing unprecedented financial challenges.
“We must take immediate action to stabilize the existing workforce, the casinos and the entire community – before we can move forward to help Atlantic City chart out its new sustainable future.”
The plan relies on revenue already generated within Atlantic City to be spent within the city. It includes stabilizing casino property tax payments by authorizing them to make payments in lieu of taxes (PILOT) in the amount of $150m for the first two years.
The legislation would obligate guaranteed tax payments, indexed on gross gaming revenus, over the next 15 years. Senator Sweeney claims that doing this would provide certainty to the city regarding the financial obligation of casinos to support Atlantic City, the school district and Atlantic County.
“Casino revenue supports many social programs, such as property tax relief for seniors, medical assistance, and housing for disabled residents, transportation assistance, and other social services programs for elderly and disabled New Jerseyans,” he said in a statement. “Stabilizing the financial relationship between casinos and the City will in turn provide more certainty for funding these essential State programs.”
Sweeney also wants to redirect the Investment Alternative Tax (IAT) to pay Atlantic City’s debt at an amount of approximately $25m to $30m annually. The IAT is a 1.25 per cent tax on gross gaming revenues and a 2.5 per cent tax on internet gaming revenues.
Other proposals include the evaluation of the Atlantic City Alliance to determine whether it is fulfilling its original purpose, reducing municipal administrative costs and ensuring financial stability for the school system, as well as requiring casinos to provide a baseline health care and retirement package for its employees.
“The casinos must ensure that workers get healthcare and retirement benefits that meet industry standards and allow employees to raise a family,” said Senator Sweeney. “Jobs are important – but jobs that provide a reasonable living wage and reasonable benefits are the ones we want in New Jersey — so people can afford housing and to raise a family.
“While there will be a time to discuss how Atlantic City moves forward to reinvent and sustain itself, we are here today to reveal our vision to stabilize the city.”
In 2006, Atlantic City casinos had brought in $4.8b in gross gaming revenue by this time of the year. This year that figure is just $2.1bn. The revenue loss at the casinos has led to crashing values of casino properties with further impacts on the city’s property tax collection.
While Atlantic City’s collective tax base was worth $20.5bn in 2010, authorities now claim that the ratable base would sink to $9bn next year, and eventually settle at around $7bn later in the decade.
“We need to bring stability and predictability to finances in Atlantic City,” said Senator Jim Whelan, a past mayor of Atlantic City. “I have lived in Atlantic City most of my live so I know what my neighbors are going through. I also believe that the city has great potential and a real future as a destination resort.”
Senator Sweeney said that to help achieve change, he has asked all stake holders – representatives of working people, business and community leaders, elected officials, the governor – to determine how Atlantic City can best reinvent itself.
“We have already seen vast improvements in the City: the boardwalk is cleaner and safer and entertainment opportunities are expanding,” he said. “The new mayor, Don Guardian, is pragmatic and knows the future of Atlantic City will mean more than just gaming. But we have to be prepared for the future.”