• Atlantic City Economy 2019
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The casino industry is making a comeback in Atlantic City, but this time around state lawmakers want to ensure past mistakes are not repeated and that if casinos prosper, so does the city. Legislators took up that cause yesterday during a wide-ranging hearing in Trenton that looked at everything from the tax rates the state levies on casino revenue to how easy it is for gamblers and other visitors to get in and out of the seaside resort.

Among those testifying before the Senate State Government, Wagering and Tourism Committee was the state’s top casino regulator along with the man who’s leading the ongoing state takeover of the city’s finances for Gov. Phil Murphy’s administration. They and others agreed that with the opening of two new casinos in recent years and the return of thousands of jobs, the casino industry is on the rise and remains a dominant force in the local economy. But new efforts are underway to ensure the casinos are more integrated into the community so that, as they rise, so does the city itself.

In 2018, Atlantic City, NJ had a population of 38.4k people with a median age of 36.3 and a median household income of $27,786. Between 2017 and 2018 the population of Atlantic City, NJ declined from 39,075 to 38,372, a -1.8% decrease and its median household income grew from $26,006 to $27,786, a. Economy at a Glance SHARE ON: PRINT: New York-New Jersey Office. Atlantic City-Hammonton, NJ. Atlantic City-Hammonton, NJ; Data Series Back Data Aug 2020 Sept 2020 Oct 2020 Nov 2020 Dec 2020 Jan 2021; Labor Force Data. Civilian Labor Force. 123.4: 112.4: 115.4: 120.2 114.1. Atlantic City has been the home of a rotating network of casino properties and resorts since gambling was legalized in the late 1970s. The hotels offered by these resorts range from five-star luxury to basic economy. Prices during the week are substantially lower than weekends.

“The real issue here is the casinos today understand that they are intimately related to the success of Atlantic City as a municipality for their success,” said David Rebuck, director of the state Division of Gaming Enforcement, during the hearing.

While the Great Recession officially ended in 2009, its effects in Atlantic City lingered for years, including as competition from other casinos that opened in nearby states took away the resort’s longtime regional gambling monopoly. Five different casinos eventually closed in Atlantic City between 2013 and 2017, taking away thousands of jobs and depriving the resort itself of a major source of tax revenue.

In the wake of the downturn, the city government faced an estimated $500 million in unpaid debts and a projected $100 million budget deficit as its ratable base was drastically reduced. Atlantic City narrowly avoided defaulting on a debt payment in 2016. Eventually lawmakers enacted state takeover legislation that now gives the Murphy administration broad powers to oversee the city’s finances.

Atlantic City Economy 2019

Making sure residents are included

As part of that effort, the administration released a report last year that called for a more holistic approach to revitalizing the city’s economy, including by making sure neighborhoods and their residents could take full advantage of any turnaround along with the casino industry. The same report also suggested that a review of the state’s casino regulations be conducted to see what, if any, role they played in the retraction in the industry between 2013 and 2017.

Among the recommendations made in that report — which now is guiding the ongoing economic recovery in Atlantic City — was a call to review the state’s oversight of the casino industry to see what lessons could be learned from the closure of five casinos within a few years of the Great Recession.

The author of the report, former U.S. Treasury official Jim Johnson, said during yesterday’s hearing that as two new casinos have opened in recent years and thousands of jobs have returned, it’s a good time to begin the lookback, much as federal officials after the recession reviewed what role existing financial regulations played in the downturn.

“Five thousand jobs have come back, but those jobs are more than just numbers on a page in a report,” Johnson said. “What those jobs represent are families and workers.”

Issues now being looked at include whether there should be a cap placed on the number of casinos allowed to operate in Atlantic City. Right now, there is no limit, although officials said yesterday that the resort has never been able to support more than 12. Another issue that bears examination, said Johnson, is whether changes should be made to the licensing process to ensure any new casinos are required to play an integral role in helping the city’s residents.

“If there are going to be new entrants into the market, what positive impact could they have on the community?” Johnson asked.

Big new tax revenues

From a financial perspective, Rebuck said the casino industry is now providing the city with $132 million in annual revenue through payment-in-lieu-of-taxes, or PILOT agreements, that were enacted through the takeover that began when former Gov. Chris Christie was in office. Meanwhile, the state is continuing to tax gross gambling revenue at a rate of 8.5 percent, with another 1.25 percent levy that is generating revenues to help the city pay down its debt. New taxes are also now being levied on sports betting after it was legalized last year, and on online gambling, which became legal in New Jersey in 2013.

“Both of those are huge successes,” Rebuck said.

Jim Plousis, chairman of the Casino Control Commission, said overall gambling revenue was up 7.5 percent last year, and sales tax revenue in the region was up about 30 percent. Room occupation at the casinos was also up by 18 percent in 2018 and salaries for workers are on the rise, he said.

“We’re trending in the right direction,” Plousis said. “There is a new energy down there.”

But yesterday’s discussion also went beyond the casinos themselves as the focus shifted to infrastructure and the ways that people get in and out of Atlantic City, including by rail and nearby Atlantic City International Airport, which is on the mainland. Lawmakers zeroed in on the lack of a direct rail connection to north Jersey and New York, and what at times can be an inconvenient link with Philadelphia via New Jersey Transit.

Rebuck also said a key for the city and the casinos is a continued focus on diversifying the revenue stream to emphasize entertainment as much as gambling.

“Certainly, people have a different interest in going to a casino than just doing your traditional gambling,” Rebuck said. “The more they diversify in nongaming and the more offerings they have is going to help them.”

Republicans seeking to eject Democratic incumbents from two General Assembly seats in this November’s elections for the 2nd Legislative District are hoping voters will endorse their arguments that Democrat-backed policies on casino taxation have damaged the economy of Atlantic City and its county.

GOP candidates Phil Guenther and John Risley believe they can help overcome a big Republican deficit in voter registration in the Atlantic County district by convincing voters that a 10-year freeze on casino taxation under the city’s 2016 payment in lieu of taxes (PILOT) program has driven up taxes for other property owners and hurt the local economy.

“We need to eliminate or restructure the taxes being frozen in Atlantic City,” said Guenther, in an interview. “Our preference would be that we get the property valuations right for the casinos, that legislatively we find a way that is fair to value the casinos and tax their properties.”

Guenther said Assemblyman Vince Mazzeo, one of the incumbent Democrats, wrote the legislation that froze the casino taxes at a time when five of the city’s 12 gaming halls had closed because of competition from gaming in nearby states.

“Most tax revenue from casinos goes to Trenton to begin with, and now one source of revenue for the city is frozen,” Guenther said. “That was the direct result of legislation that Mazzeo authored.”

Rich DiCriscio, a spokesman for the Democrats’ campaign, said the PILOT program had helped to stabilize both tax revenue from the casinos and the broader Atlantic City economy.

Helping a city on the brink

“Atlantic City was on the brink of bankruptcy when Vince Mazzeo took office in 2014,” DiCriscio said. “He quickly took action, passed the PILOT legislation to stabilize tax rates in the city, and now Atlantic City’s economy has turned around. That legislation is single-handedly responsible for ensuring that casinos paid their fair share into the city’s budget and kept Atlantic County taxpayers from picking up the tab.”

The Republicans also argue that the state takeover of Atlantic City government by the administration of former Gov. Chris Christie in November 2016 needs to end despite last year’s announcement by Gov. Phil Murphy that the state will continue to oversee the city’s perilous finances, possibly until the scheduled end of the program in 2021.

Guenther and his running mate, John Risley, oppose a plan by Mazzeo to transfer local taxing authority to the county from its municipalities because it would increase costs to taxpayers and weaken local control.

“The plan would create a county bureaucracy which would take over all the assessments and all the workings of the tax assessors in all the towns in Atlantic County,” said Risley, a stockbroker and investment adviser. “We would have to hire a lot of people, and it would take all local control away and put it all in the county’s hands.”

Mazzeo said through a spokesman that he supports a countywide tax assessment because it would cut costs and help reduce property taxes. “It’s long past time that we address the sky-high property taxes across our state and find a way to shrink redundant government costs without cutting services,” he said.

Even if the Republicans win the district, Risley said he has no illusions that they will be part of a majority in the Legislature. “Will be in the minority, no question about it,” he said. “It doesn’t bother me because I’m all about Atlantic County.”

For his part, Mazzeo focused on the district as a whole, and pledged to continue to work for lower property taxes.

Paying less in taxes and for prescription drugs

Mazzeo, 55, a small-business owner who lives in Northfield, said he has made some progress on curbing property taxes since the last Assembly election in 2017 but that more remains to be done. “Too many seniors and hard-working families in Atlantic County pay too much in property taxes and for prescription drugs,” he said in a statement.

He acknowledged that the district is among about a half-dozen of a statewide total of 40 that will be competitive in the Nov. 5 election but predicted that he and his running mate, Assemblyman John Armato, will prevail.

“My district has been competitive for over a decade and I know that a win is never handed to you in Atlantic County,” he said. “My district has always been targeted in the past, but I have found a way to win because Atlantic County families know that I am on their side.”

In 2017, Mazzeo and Armato won 28 and 26% of the vote, respectively, some six percentage points ahead of Republicans Vince Sera and Brenda Taube.

Guenther said the GOP would work to overcome the Democrats’ advantage of about 16,000 registered voters by working to attract the district’s approximately 57,000 unaffiliated voters (more than those registered for either of the main parties), urging high turnout among Republicans and hoping to attract any Democrats who are frustrated by the incumbents’ record.

Still, the larger number of registered Democrats may exaggerate the party’s advantage because many of them are in Atlantic City where turnout is traditionally low, said Ben Dworkin, director of the Rowan Institute for Public Policy and Citizenship at Rowan University.

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Registration not deciding factor

“Voter registration doesn’t mean as much here,” Dworkin said. “The Democrats have a clear plurality in terms of voter registration but many of those votes are in Atlantic City which historically doesn’t have the kind of turnout that Democrats would always want.”

He noted that the district is one of only two among the state’s total of 40 where representation in Trenton is split between the parties; the district’s state Senate seat has been held by a Republican, Chris Brown, since 2017.

The GOP candidates see Brown’s incumbency, and the fact that he previously served three terms as an assemblyman in LD2, as hopeful signs that they can seize the district from the Democrats.

“The model that we know has been successful already has been Chris Brown’s election to the Assembly and the Senate,” Guenther said. “We believe that the people in the second district understand the issues. Our challenge is to make sure we get that information out.”

Guenther, 61, who was mayor of Brigantine for 25 years until January 2018, said he had been planning to retire but was persuaded to run for the Assembly by GOP officials. He is a former teacher and school principal, and now superintendent of the Atlantic County Vocational and Special Services school districts.

Armato, 71, a retiree from Buena Vista Township, said he will focus on reducing property taxes by working to cut costs and fully fund the state’s school-funding formula if elected to a second term.

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“Providing property-tax relief is always a priority,” he said in a statement. “We have made some great strides during the last two years, but New Jersey still needs to fully fund the school-funding formula and focus on shared services to bring property taxes down.”

He played down the possibility that national politics will influence the local race now that President Donald Trump is under threat of impeachment, saying that 2^nd District voters are more concerned with local issues.

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“President Trump has been at the center of the media’s attention for four years but that isn’t what people talk to me about at their doors,” he said.