New Jersey’s political and business leaders have been engaged in vigorous discussion lately about the future of New Jersey’s gaming industry and Atlantic City in particular.  Yesterday, New Jersey Senate President Stephen Sweeney introduced several bills as part of these ongoing efforts to address the transitions in Atlantic City and New Jersey’s gaming industry.  I’ve summarized each of them below.

S2572 – Major Changes to Casino Property Taxes

Atlantic City’s casinos pay the lion’s share of property taxes, and those property taxes are calculated based on the assessed value of the property.  Over the last several years, many casinos have successfully appealed the assessed value of their properties, based on the downturn in Atlantic City’s gaming market.  As a result, the amount of tax dollars paid to the City of Atlantic City (which then must distribute a share to the School District and Atlantic County) has declined.

S2572 would dramatically change the property tax structure for Atlantic City casinos.  First, the bill provides that every casino property in Atlantic City is exempt from traditional property taxes.  Instead, the casinos will be organized into the Casino Operator’s PILOT Council (PILOT standing for Payment In Lieu Of Taxes).  The members of the Council will agree to make a PILOT payment to the City of $120 million in 2015, and adjusted for inflation thereafter.  However, if annual gross gaming revenue is between $2.6 billion and $3 billion, the PILOT increases to $130 million; $150 million if revenue is between $3 billion and $3.4 billion; and $165 million if revenue is between $3.4 billion and $3.8 billion.  If revenue falls below $2.2 billion, the amount will be proportionally decreased.

Each casino’s share of the payment is to be calculated by a formula that takes into account, in equal parts, (a) the amount of land in acres owned by the casino; (b) the number of hotel rooms and (c) the property’s gross gaming revenue.  For 2015 and 2016 only the casinos will be obligated to pay an additional $30 million per year.  If new casinos open or existing casinos close, the formula will be adjusted to reflect that.

S2573 – Mandatory Health Benefits for Casino Employees

S2573 is a short bill requiring that a casino licensee submit proof to the Division of Gaming Enforcement that “all agreements it has entered into with each majority representative of its employees for collective bargaining purposes provide for suitable health care benefits and suitable retirement benefits for all full-time employees covered by such agreements.”

A casino that fails to do so would be subject to license revocation.

S2574 – Aid to Schools

S2574 would create a new form of state aid called Commercial Value Stabilization Aid.  This aid would be made available to the Atlantic City school district.  If the Commissioner of Education determines based on a needs assessment that the aid is warranted, then the Commissioner can authorize state aid to defer the school portion of the municipal tax levy.  This aid would only be available until such time as assessed values in Atlantic City return to the levels they were at in 2008.

S2575 – Reallocation of Investment Alternative Tax

In addition to an 8% gross revenue tax, Atlantic City casinos pay 1.25% of gross gaming revenue to the Casino Reinvestment Development Authority (CRDA).  Until 2011, the funds collected by CRDA were used to invest in various projects around the state.  Since that time, the funds are to be used exclusively to fund projects in Atlantic City.  This bill would reallocate all CRDA funds paid by casinos to the City of Atlantic City for the next 15 years and would require that the City use those funds exclusively to pay down its municipal debt.

S2576 – Elimination of the Atlantic City Alliance

The Atlantic City Alliance is a non-profit corporation funded by the casinos to serve as a public-private partnership to market Atlantic City.  This bill would essentially eliminate the Atlantic City Alliance.

It remains to be seen whether any of these bills will pass and what other ideas may become part of the discussion.  Each bill would have to pass both the Assembly and the Senate by the end of the 2015 legislative year, and be signed by Governor Christie, in order to become law.