Lawmakers OK Tax Breaks for Casinos, County Officials Worry About Knock-On Effects

County representatives raise concerns about revenue stream for Casino Revenue Fund, which contributes to services for seniors, people with disabilities
Credit: (AP Photo/Wayne Parry)
Dealers conducting a game of roulette at the Ocean Casino Resort in Atlantic City, June 18, 2019. Atlantic City’s nine casinos posted a collective gross operating profit of $29.6 million in the first three months of this year, down 65% from the same period a year ago due to casino closures during the coronavirus outbreak.

State lawmakers are trying to make sure Atlantic City’s casinos survive the latest economic downturn even as their gambling floors have been closed for months due to the ongoing pandemic.

A measure approved with bipartisan support by a key Senate committee on Thursday would provide the casinos with a number of different tax breaks to help ease their financial troubles during the health crisis.

The same bill — thanks to a last-minute amendment — would also make available $100 million from the federal Coronavirus Aid, Relief, and Economic Security Act to help aid small businesses, in Atlantic City and all over the state.

Supporters of the measure say it can help South Jersey avoid the type of economic turbulence that occurred in the wake of the 2007-2009 Great Recession, when several casinos went out of business, leaving thousands of workers unemployed. Pairing the casino aid with new assistance for small businesses also helps address concerns about propping up the casinos even as others in the community are suffering.

But lawmakers on Thursday also heard several new concerns about the casino-aid measure, including how the proposed tax breaks could end up hitting services that are funded directly with casino revenues. They include those that benefit New Jersey’s seniors and the disabled.

The bill’s primary sponsor, Senate President Steve Sweeney (D-Gloucester), signaled later in the day that maintaining those services is a top priority as lawmakers also try to prevent any new casino closures.

“The harm to the programs’ gaming-revenue supports will be far worse if we stand by and do nothing,” Sweeney said. “The programs and services provided by the counties with these funds for the aged and disabled will remain a priority and I am committed to their support and stability.”

The gambling floors at New Jersey’s casinos have been closed since mid-March under strict social-distancing measures that Gov. Phil Murphy ordered to help prevent further spread of the novel coronavirus. And while the governor has begun to discuss ways to allow casinos to reopen, it remains unclear exactly when that may occur.

Thousands out of work

The ongoing closure has already helped put nearly 30,000 casino employees out of work, many of whom live in Atlantic City and surrounding communities.

Lawmakers say they are trying to prevent a repeat of what happened after the 2007-2009 recession, when Atlantic City’s casinos suffered huge revenue losses, with four eventually going out of business. The closures and job losses devastated the local economy and helped bring on a surge in mortgage foreclosures.

Atlantic City’s government also went into distress as tax revenues plummeted, resulting in a series of credit-rating downgrades and a state takeover that remains in place today.

To prevent those types of setbacks this time around, the bill allows for several technical changes to some of the taxes and fees that casinos must pay under current law, including licensing fees. It also changes how the revenue from those taxes and fees can be used. And it allows for some of the proposed tax-policy changes to be in place for as long as two years.

“We are protecting a lot of jobs in the Atlantic City area and the South Jersey region,” said Sen. Nilsa Cruz-Perez (D-Camden) as she cast her vote in favor of the legislation during the Senate Budget and Appropriations Committee’s meeting Thursday.

The measure received a majority of support from committee members during the meeting in a 7-1-4 vote, but several representatives of county governments raised concerns about how it could impact services for seniors and people with disabilities that are funded by the Casino Revenue Fund.

More than a dozen different services receive a portion of their funding from the Casino Revenue Fund under rules established decades ago after casino gambling was first legalized. But one of the tax breaks that would be offered to casinos under the bill would directly cut into that revenue stream, at least on a temporary basis.

Fears rural transportation services will suffer

Carol Novrit, administrator of the Sussex County Department of Health and Human Services, said the transportation services her county government provides are among those that would take a hit. And they are the only public transportation in what are generally rural communities, she said.

“We serve our senior citizens and our persons with disabilities,” she said. “Without that (funding), we can’t get them to life-saving dialysis, we can’t get them to their chemotherapy appointments, we can’t get them to the food stores so they have something eat.”

Similar concerns were also raised by Martin DeNero, director of the county transportation service in Mercer County, which helps serve senior citizens.

“Residents need the support provided by the Casino Revenue Fund as it was originally established when the casinos were established,” DeNero said. “Our customers are struggling (and) they are the most vulnerable.”

While several lawmakers showed a willingness to back additional amendments to make sure the issues raised by the county officials are eventually addressed, it’s unclear if any will be made. The measure has already cleared a legislative committee in the Assembly, and could come up for a vote in the full Senate as early as next week.

Members of the committee also noted that it takes a healthy casino industry to have a flush Casino Revenue Fund available to pay for those services.

“We all know, in order to have a Casino Revenue Fund (that’s) plentiful, we have to have our casinos,” said Sen. Steve Oroho (R-Sussex), who was one of the four abstentions.