Lawmakers introduced legislation this week creating tax breaks and zero-interest loans to help prop up the state’s nine casinos as they see revenue nosedive during the COVID-19 global pandemic.
The state’s casinos, all based in Atlantic City, have been closed since March 16 under an order from Gov. Phil Murphy in an effort to stop the spread of the highly infectious respiratory illness.
That’s led to across the board drops in revenue for the state’s gambling industry, which months ago was showing promising signs of growth. Thousands of casino and hospitality workers have also been laid off.
One measure, Assembly Bill 4031, would let casinos borrow interest-free loans from the state to cover property tax payments toward the Atlantic City government, so as to keep afloat a local government already with very few sources of money. A second measure, Assembly Bill 4032, grants tax breaks to the casinos on a sliding scale, depending on how steep a drop they’ve seen in revenue because of the pandemic.
Casinos would have to use the tax breaks to “rehire and employ former employees,” attract patrons to the casino and hotel, market and promote events to draw tourists to Atlantic City, and anything else that would help with the “return of pre-emergency economic, gaming and tourism levels” in the city.
New Jersey’s total gaming revenue was $275 million in February 2020, compared to $232 million in February 2019 – or an 18.4 percent increase. – RESORTS CASINO HOTEL
“This legislation will help stabilize this vital industry, support the safe reopening of our proprieties, and help us welcome back employees and guests as soon as New Jersey’s stay-at-home order is lifted,” reads a statement from Steve Callender, president of the Casino Association of New Jersey.
“Atlantic City casinos and hotels have been closed since March 16, and once we reopen and start to recover, we know that there is a long road ahead of us and our employees,” he added.
The bills are sponsored by two South Jersey Democrats: Senate President Stephen Sweeney, D-3rd District, and Assembly Majority Leader Louis Greenwald, D-6th District.
Under A4031, casinos would borrow from the state’s Property Tax Relief Fund, a pot of money that provides tax breaks to lower-income and senior citizen residents. Under the bill, they could only use the money toward payments in lieu of property taxes owed to the city between May 1 and Aug. 1. Loans would be interest-free, and casinos would have 36 months to pay them back without accruing any interest.
In the aftermath of the Great Recession, the casinos – Atlantic City’s only source of tax income – closed en masse, forcing the city to the brink of bankruptcy and prompting a still-ongoing state takeover in 2016.
Under A4032, casinos could get off of paying the 8 percent tax on their gross earnings and the 1.25 percent “ investment alternative tax” on in-person, casino gaming.
To gauge just how much of tax break the casino is eligible for each month, the state would compare the numbers that month with what they earned in February 2020 – the month before the pandemic hit the state in full force.
Casinos making less than 25 percent of what they brought in for February would be entirely exempt from those two taxes. Casinos that brought in up to 49 percent of what they made in February would only pay 25 percent of the taxes they would typically owe.
Casinos that brought in up to 74 percent what they made in February would be on the hook for half the taxes they would typically owe. And casinos that made up to 99 percent what they made in February would be on the hook for 75 percent of the taxes they owe.
The bill also allows casinos to defer fees through next January that they would have to collect and pay to the state on hotel bookings, while parking fees can be put off for two years.
