Judge to decide damages in Atlantic County casino tax break case

Bill signed into law in December reduced payments casinos sent to the county

By: - July 14, 2022 7:28 am

Atlantic County argues a tax break measure signed into law last year will cost the county up to $25 million in the next four years, though state officials say any expected lost revenue is “impossible” to know. (Photo by Mark Makela/Getty Images)

A Superior Court Judge will decide in the next 30 days whether the state must pay Atlantic County millions of dollars to make up for tax revenue lost when Gov. Phil Murphy signed a casino-backed tax break measure last year.

Judge Michael Blee is overseeing a legal dispute between the county and New Jersey, with the county alleging the tax break violates the parameters of a 2018 settlement agreement between the county and the state. Blee’s impending decision would outline how much money he thinks the county should receive in damages.

The amendments signed into law by Murphy in December 2021 amended a payment-in-lieu-of-taxes program created in 2016 that exempted casinos from property taxes and reduced the county’s tax base by $3.2 billion. Supporters of the newest bill said it would prevent the closure of as many as four Atlantic City casinos. Critics have slammed it as a windfall for casino owners passed with little debate during the Legislature’s lame-duck session.

Ronald Ricchio, an attorney for Atlantic County, argued during a hearing Wednesday the amended law would reduce the payments the county agreed to accept in the 2018 settlement, and therefore violate that court order.

“This goes right directly to the constitutional separation of powers. It’s the executive and the legislative branch essentially thumbing its nose to the judiciary, and it doesn’t work that way,” Ricchio said.

The amended law will cost the county as much as $25 million through 2026, when the settlement terms lapse, Ricchio said. PILOT payments would deprive the county of $4.7 million this year, he added.

Two PILOT payments made in February and May were roughly $2.4 million short of what the county would have received under the old version of the law, he said.

Attorneys for the state noted Judge Joseph Marczyk, who heard the case before his temporary assignment to the Appellate Division last month, did not stop the amended law from taking effect in earlier rulings and they alleged Atlantic County officials could not know the effect of the changes on PILOTs ahead of time because the payments are based on casino revenue, which varies year-to-year.

“It’s literally impossible to do, your honor,” said John Lloyd, who represented the state and Atlantic City, which backs the newest tax break law. “Absent that ability, all the emotion about flouting this court, coequal branch of government, the citizens and taxpayers of Atlantic County falls apart.”

The parties also sparred over internet gaming revenue. That revenue has been used in past calculations of gross gaming revenues — which are used to set PILOT payment levels — but state statute does not require they be included in those measures.

Any decision in this case is likely to be appealed. Attorneys for the state have already attempted to move the case into the Appellate Division, but that bid was unsuccessful.

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Nikita Biryukov
Nikita Biryukov

Nikita Biryukov most recently covered state government and politics for the New Jersey Globe. His tenure there included revelatory stories on marijuana legalization, voting reform and Rep. Jeff Van Drew's decamp to the Republican Party. Earlier, he worked as a freelancer for The Home News Tribune and The Press of Atlantic City.

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