With Atlantic City’s casino payment-in-lieu-of-taxes (PILOT) program set to expire next year, state officials and stakeholders have begun discussions on whether to extend the arrangement. The program, which was introduced in 2016, replaced traditional property taxes for casinos with an industry-wide assessment based on gross gaming revenue.
The funds generated have been distributed among Atlantic City, its school district, and Atlantic County to support public services and municipal operations. State Sen. Vince Polistina, R-Atlantic, confirmed that conversations about a potential extension have been ongoing for the past few months, including talks with members of the governor’s administration.
He plans to engage with local officials to establish a unified approach before moving forward with new legislation. “As we move forward, we will discuss what we are going to propose with City Council and county commissioners and build consensus this time before we get it passed,” Polistina said, as per Press of Atlantic City.
Atlantic City has received over $48.5 million from the PILOT program in the past year and $51.6 million in 2023, according to budget records. The program was initially designed to stabilize the city’s finances by eliminating frequent casino property tax appeals, which had previously placed a strain on local government revenue.
Polistina expressed support for keeping the system in place, stating: “I don’t see ever going back to traditional real estate taxes for casinos. You need the PILOT to give certainty. That has to continue in perpetuity.”
However, Atlantic County Executive Dennis Levinson has raised concerns about the program, arguing that the county has been shortchanged under the existing agreement. He said state officials have not yet reached out regarding a new PILOT plan and stated that outstanding payments should be addressed before any extension is considered.
“We also now have $14 million and counting that is owed to us,” Levinson said. “Before they start a new PILOT, it would be nice if they paid their debts.”
The county has long contended that it has been underpaid through the program and previously took legal action against the state. Under a 2018 consent agreement, the county was set to receive 13.5% of PILOT payments through 2024, decreasing to 12% for the final two years.
However, a 2021 revision to the program altered this structure by removing online gaming and sports betting revenue from the gross gaming revenue calculations. This adjustment, which was introduced to support casinos amid the economic effects of the COVID-19 pandemic, reduced the amount casinos were required to contribute by approximately $55 million per year, a change that directly impacted Atlantic County’s share of funds.
Levinson has argued that county taxpayers should not be the only ones responsible for offsetting the financial burden created by adjustments to the PILOT program. “Everyone agrees casino gaming benefits the whole state,” he said. “Why should Atlantic County taxpayers be the only ones that have to pay for it?”
In addition to discussions on the PILOT extension, Polistina confirmed that lawmakers are also reviewing the Municipal Stabilization and Revitalization Act (MSRA), which has governed the state takeover of Atlantic City since its passage. The current state takeover legislation is set to expire this year, and conversations are ongoing about its future.
“We have to figure out MSRA, the PILOT, CRDA (Casino Reinvestment Development Authority) IATs (Investment Alternative Tax funds),” Polistina said. “They have all been under discussions for months now, so we are not in a situation like we were in before with two months to get things done.”
Investment Alternative Tax (IAT) funds, which include a 1.25% tax on brick-and-mortar gaming revenue and a 2.5% tax on internet gaming revenue, were originally designated for the Casino Reinvestment Development Authority (CRDA) to invest in Atlantic City’s tourism economy.
However, since 2022, these funds have been redirected to help pay down Atlantic City’s municipal debt as part of the state takeover. In 2023, the city received nearly $68.17 million in IAT funding, according to state records.
Mayor Marty Small Sr. expressed optimism about the state’s continued involvement in city operations, saying that he expects the partnership between Atlantic City and the state to continue if MSRA is extended.
“We truly are partners in everything we do. If MSRA continues, as long as that partnership continues in the same way it has, and we keep trending in the positive direction we’ve been heading, I would be OK with that,” Small said. “We also look forward to the day all city debt is paid off, as that would be a huge burden lifted off our wonderful taxpayers.”
Original article: https://www.yogonet.com/international/news/2025/02/03/93933-discussions-underway-to-extend-atlantic-city-casino-pilot-program-as-expiration-looms
