For the moment, Atlantic County is a winner. New Jersey Superior Court Judge Michael Blee recently agreed with the county that the state law approved last December which removed sports betting and online gaming revenues from the calculation of the casino industry’s tax bill violated a consent order from 2018.
The court said the tax program—known as PILOT for “payment in lieu of taxes”—was obligated to retain the original calculations when determining what the county receives, according to the consent order. The new legislation removed iGaming and online sports gaming revenues from what the state considered gross gaming revenues, and the county estimated that change would cost it about $5 million per year.
The state has indicated they will file an appeal. Had the decision gone in favor of the state, Atlantic County would lose $26 million over five years. That’s a lot of money.
“This is a big win for the taxpayers of Atlantic County,” County Executive Dennis Levinson said in a statement. “Our fight was to protect their best interests and hold the state accountable for its court-ordered agreement.”
Levinson said the county advised Governor Phil Murphy the amended PILOT legislation would breach the terms of the consent order, but Murphy ignored repeated attempts to communicate, he said.
“The governor quickly signed the bill four days before Christmas 2021 during a lame duck legislative session,” Levinson said. “To add further insult to injury, after our suit was filed, the state refused to mediate despite being strongly recommended to do so by the courts.”
Levinson said it was disappointing the state has responded to the order with more delaying tactics.
“The longer this continues, the more money ends up in the pockets of the attorneys,” he said.
In 2018, the county and the state worked out a settlement regarding the original PILOT legislation from two years prior.
Judge Blee’s order, issued July 29, requires the state to pay Atlantic County more than $2.4 million within five days for the shortfall in payments made to the County thus far in 2022. Judge Blee also granted an increase in payments to the County that are due on August 15 and November 15. In the end, Atlantic County would receive more than $22 million this year.
Judge Blee also required the state to make quarterly payments through 2026 under the terms of the consent order. Finally, the county will be reimbursed for attorney and similar fees.
In his decision, Blee said “the State made a ‘calculated decision’ to willfully violate multiple court orders . . . “ when it issued deficient payment to the county.”
Levinson dismissed state claims that he took an “antagonistic attitude against the State of New Jersey and Atlantic City,” which was based upon an emotional, political argument rather than a legal basis.
“Hogwash,” Levinson said. “With this ruling, the courts have substantiated my position. To this day, the state refused to speak to us. The citizens of Atlantic County deserve better. I took an oath to represent them and that is what I will continue to do.”
The motion to appeal stops the need to pay $2.36 million now or the two payments of about $5.6 million on August 15 and November 15, according to the Press of Atlantic City.
“The court’s requirement that the state make a multi-million dollar payment in such a short timeframe is burdensome, and the court’s quarterly payment calculation (even assuming that the court’s underlying conclusions on the merits of the county’s claims were correct) overstates the state’s obligation by $4,437,500,” attorneys for the state argued in a brief supporting the stay request.
