New Jersey Governor Phil Murphy has assured residents that casinos will continue paying fair taxes. His administration is currently in a court fight to ensure that the state will uphold an amendment of the 2021 law that cut casinos` tax burden by millions.
The changes in the payment-in-lieu-of-property (PILOT) tax led to casinos paying $55 million less in taxes in 2022. The governor was speaking on February 2, 2023, during a radio show called Ask Governor Murphy at WNYC. The senior reporter at WNYC Nancy Solomon had asked the governor about his PILOT project and how he thought it would fit in his vision of a strong and fair economy.
Murphy replied by saying he did not have the math at hand. He added that he would ensure that casinos paid a fair share as taxes.
New Jersey through Murphy’s administration is appealing Superior Court rulings for two different lawsuits. Atlantic County and Liberty and Prosperity 1776 challenged the 2021 law amendment of the PILOT law that left casinos paying much less in taxes.
Last year, the Superior Court ruled in favor of Atlantic County. Judge Joseph Marczyk wrote in his February decision that the amended PILOT 2021 law violated a 2018 consent order that determined how much revenue casinos would share with the state.
County officials predicted that the state would lose almost $19 million between 2022 and 2026. With the amended PILOT.
Seth Grossman of Liberty and Prosperity and county executive Dennis Levinson questioned Murphy`s commitment to fair taxes.
Levin questioned why the Atlantic County taxpayers would be the only people taking the hit while casinos stood tall.
How PILOT Works
This is the first time Murphy is talking about casino PILOT since December 2021 according to The Press of Atlantic City. The governor talked about the amended PILOT before signing the bill into law. He agreed with the amended PILOT.
Since 2017, casinos have been paying PILOT. This is basically an industry-wide assessment share.
Instead of paying property taxes, casinos would pay PILOT. This fund would then be distributed to Atlantic County, the school district, and Atlantic City.
The initial PILOT system determined the share a casino was supposed to share with the state based on three things, including the number of hotel rooms, acreage, and gross gaming revenue. The casinos pushed for legislative changes in 2021 that would exempt online gaming from the 2017 PILOT program.
Back and Forth Fight Between the State and Courts
Last year, Liberty and Prosperity challenged the changes noting that the New Jersey original documents did not condone preferential tax treatment. Judge Michael Blee agreed with Liberty and Prosperity.
Meanwhile, the state replied by saying that the new law was exempted from the original law because of public purposes. However, Judge Blee disagreed, saying that changes to PILOT were a way to help the casino industry.
The state wrote to the Superior Court of New Jersey Appellate Division explaining that the amended PILOT served the public purpose by redirecting Investment Alternative Tax revenue to Atlantic City and preventing tax hike for the casino market. The brief also explained that the casino would have had financial challenges if the PILOT remained the same. This war is set to continue in the next few weeks or months.
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