The debate over New Jersey Senate President Stephen Sweeney (D-3) and Senator Jim Whelan’s (D-2) payment in lieu of taxes bill continues to spark controversy as the Republican and Democratic sides attempt to find the best way for Atlantic City to improve its credit rating and draw new investment to the former gaming capital. The bill awaits the governor’s signature, with Atlantic County mayors and freeholders calling for a conditional veto.
In a statement to PolitickerNJ, Assemblyman Chris Brown (R-2) characterized the PILOT bill’s proposed fixed rate for Atlantic City’s remaining casinos as “corporate welfare” and accused the Democratic side of delaying a vote on the bill. Noting that the proposed flat rate for casinos could lead to an undue tax burden for other business interests in the city, Brown said “I am concerned this property tax inequity may discourage new businesses from locating or staying in Atlantic City.”
Brown suggested that the PILOT bill may even be unconstitutional, saying that “[an] argument may be made that no real property may be exempted from paying property taxes unless permitted through a constitutional amendment approved by the voters.”
When reached for comment, Senator Whelan welcomed the possibility of a challenge.
“If that’s the case then all PILOT programs are unconstitutional,” said Whelan, adding “if it’s unconstitutional, why did he vote for it? PILOTs are relatively commonplace in NJ, and if somebody wants to mount a constitutional challenge, I’m sure the courts would be interested in that.”
Whelan was circumspect about Brown’s objections to the bill, saying that in his judgment the PILOT is both the city and county’s best chance to reverse the trend of large-scale tax refunds for casinos when they appeal their property tax rates in court.
“[Trump] Taj Mahal, in 2014, paid $27 million,” said Whelan. “Without the PILOT, they will successfully appeal their taxes, and they will probably pay one quarter of that or less.” Whelan added that a similar scenario would likely play out for the Tropicana Casino & Resort and Caesars Atlantic City.
“Chris Brown and others keep talking about the PILOT bill, and what’s going to happen when the pain comes. And the pain is coming, it’ll get worse before it gets better here. They’ll say ‘well, they didn’t do it the way we said they should do it.’”
Whelan went on to say that diminished tax revenues on all sides will be inevitable, regardless of the governor’s decision. “Whether you have a PILOT or don’t have a PILOT, it doesn’t change the underlying fact that four casinos closed, the remaining casinos were worth less, and due to that fact, they pay less to the city and the city pays less to the county.”
Atlantic County Republican Chairman Keith Davis previously told PolitickerNJ that one alternative to the PILOT could be to allow casinos to fend for themselves and move forward with bankruptcy proceedings for the city.
“How long would it take the city to crawl out of that hole with its bonding rating and bonding capacity and the tracking development and so on and so forth if you go through a bankruptcy?” said Whelan. The senator added “[that’s] Donald Trump logic.”
Law professor and former Assemblyman Fred Caraballo doubted the chances of any challenge to the bill on a constitutional basis, saying that payment in lieu of taxes is too wide-spread a practice among too many municipalities to challenge with a narrow reading of the state constitution. “I can’t imagine, to be very very honest with you, that the supreme court would take the position that something as deeply entrenched in the everyday life of NJ municipalities is all of a sudden going to be deemed unconstitutional,” said Caraballo.
“He’s got to be raising this as an issue across the board, he can’t just be phasing out Atlantic City.”