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Atlantic City Casino PILOT Tax Plan Heads Back to Court

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Atlantic County, New Jersey, and the nonprofit Liberty and Prosperity are set to appear in state appellate court on March 20. They'll be reigniting a years-old argument that Superior Court judges made the correct decisions when ruling that changes to casino payment-in-lieu-of-taxes (PILOT) rules in 2021 violated county agreements and the state Constitution.

Atlantic City Casino PILOT Program Off Course

The amendments to the original 2016 PILOT law, enacted by the state Legislature in 2021, excluded internet gaming and online sports betting revenues from gross gaming revenue calculations, resulting in substantial savings for the casinos in PILOT payments, according to the lawsuit. Atlantic County Executive Dennis Levinson stated that if successful, the county could be owed $14 million by the state.

Related: Atlantic City Casinos Remain Strong Despite Revenue Dip

Levinson emphasized the county's prudent financial management, highlighting the reduction in property tax rates anticipated for 2024, expected to decrease from 43.8 cents to approximately 39 cents per $100 of assessed property value. While the county is projected to raise about $6 million more from taxpayers in its $262 million budget for the year, the rate decrease is attributed to the increased value of property in the county.

A judge recently granted the state a 90-day stay of the August decision striking down changes to the PILOT law, which had been challenged in court by both Atlantic County and Liberty and Prosperity. Superior Court judges ruled against the state in 2022, finding that the new PILOT law violated a 2018 agreement between the state and county and that it was constitutionally flawed in a way that favored casinos over taxpayers. However, the amended PILOT law went into effect while the state appealed the rulings.

No Closer to a Resolution

Attorney Seth Grossman, representing Liberty and Prosperity, outlined the different remedies being sought, stating that while the county argues for a larger share of the revenue pie, their argument is for the pie itself to be expanded. Grossman expressed frustration at the lengthy appeals process, noting that if the court rules in favor of retroactive payments from casinos, it could significantly impact the industry, potentially leading to closures or job losses.

Superior Court Judge Joseph Marczyk's February 2022 decision found that the state breached the terms of a 2018 consent order with Atlantic County by enacting the new PILOT law. Similarly, in August 2022, Superior Court Assignment Judge Michael Blee invalidated the 2021 amendments to the original PILOT law, deeming them unconstitutional for granting significant tax breaks to casinos without serving a public purpose. Since then, the topic has repeatedly been up for debate, although never close to a resolution.

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