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To address an emergency fiscal crisis, Senate President Steve Sweeney on Monday presented a plan to bring financial stability to Atlantic City and position the city for future economic opportunities. The proposal comes in advance of the summit scheduled for Wednesday that will bring together government officials, community leaders, business and labor to follow through on the first meeting held in the wake of multiple casino closings.

Senator Sweeney’s plan would bring immediate economic stability to Atlantic City and its casinos and lay the foundation for future economic growth that includes a financially-healthy gaming industry as well as other attractions as a “destination” resort city.

“This is a plan to protect Atlantic City from bankruptcy and position the city for future economic growth,” said Senator Sweeney. “With four casinos already closed and one likely to close by the end of the year, Atlantic City is facing unprecedented financial challenges. We must take immediate action to stabilize the existing workforce, the casinos and the entire community – before we can move forward to help Atlantic City chart out its new sustainable future.”

The facts are stark.  While Atlantic City’s collective tax base was worth $20.5 billion in 2010, Mayor Don Guardian has said the ratable base would sink to $9 billion next year, and eventually settle at around $7 billion later in the decade.  No other city in New Jersey has seen its total property value drop 55 percent in the past 5 years, and it is expected to drop even further by the end of decade.

“Atlantic City has been a great part of New Jersey’s history and it has a great future,” said Senator Sweeney.

In 2006, by this time of the year Atlantic City casinos had brought in $4.8 billion in Gross Gaming Revenue.  Through September of this year, gaming revenue is $2.1 billion.  The revenue loss at the casinos has led to crashing values of casino properties with massive impacts on the city’s property tax collection.  That is why these financial problems need to be looked at in their entirety and addressed with innovative solutions.

“We need to bring stability and predictability to finances in Atlantic City,” said Senator Jim Whelan, a past mayor of Atlantic City. “I have lived in Atlantic City most of my live so I know what my neighbors are going through. I also believe that the city has great potential and a real future as a destination resort.”

Atlantic City will have to make sacrifices and changes as well.  The municipal government will have to tighten their belts, do more with less and ensure they are operating as efficiently as possible.

The state will have to take a pro-active role to ensure financial stability for the school system, including proper oversight.

“The casinos must ensure that workers get healthcare and retirement benefits that meet industry standards and allow employees to raise a family.  Jobs are important – but jobs that provide a reasonable living wage and reasonable benefits are the ones we want in New Jersey — so people can afford housing and to raise a family,” said Senator Sweeney.  “While there will be a time to discuss how Atlantic City moves forward to reinvent and sustain itself, we are here today to reveal our vision to stabilize the city.”

We are proposing a plan that relies on revenue already generated within the city, to be spent within the city.  This plan would bring more immediate economic stability to Atlantic City and its casinos and lay the foundation for future economic growth that includes a financially-healthy gaming industry.

“We need to stop the bleeding in Atlantic City,” said Assemblyman Vince Mazzeo. “This will help control property taxes and protect senior citizens, middle-class homeowners and other residents of the city. Reducing that financial burden on taxpayers is critical for the future of Atlantic City and the region.”

Again, the Atlantic City region has been an important part of our past and our success, and the tens of thousands of people whose livelihoods depend on the gaming industry will not be forgotten.  It is clear that the current environment is unsustainable for the casino industry, the city and its residents.

Bold action is needed to thwart the loss of property tax revenues, the problem of continued tax appeals, and to ensure that the city and its remaining casino industry return to fiscal solvency and ultimately prosperity.

“To help achieve that change, I asked all stake holders – representatives of working people, business and community leaders, elected officials, the governor – to determine how Atlantic City can best reinvent itself,” said Senator Sweeney. “We have already seen vast improvements in the City: the boardwalk is cleaner and safer and entertainment opportunities are expanding. The new mayor, Don Guardian, is pragmatic and knows the future of Atlantic City will mean more than just gaming. But we have to be prepared for the future.  As this dialogue continues, I believe there are several key components that can be implemented to make our vision of Atlantic City a reality.”

Senator Sweeney’s Plan: Fiscal Stability For Atlantic City

a) Stabilize Casino property tax payments by authorizing them to make Payments In Lieu Of Taxes (PILOT) in the amount of $150 million for the first two years.

The legislation would obligate guaranteed tax payments, indexed on Gross Gaming Revenues, over the next 15 years.

Doing this provides certainty to the city regarding the financial obligation of casinos to support Atlantic City, the school district and Atlantic County.

Casino revenue supports many social programs, such as property tax relief for seniors, medical assistance, and housing for disabled residents, transportation assistance, and other social services programs for elderly and disabled New Jerseyans.  Stabilizing the financial relationship between casinos and the City will in turn provide more certainty for funding these essential State programs.

b) Redirect the Investment Alternative Tax (IAT) pay Atlantic City’s debt at an amount of approximately $25 million to $30 million annually: The IAT is a 1.25% tax on gross gaming revenues and a 2.5% tax on internet gaming revenues. Redirecting these revenues will save residents $25 million – $30 million each year.

c) The Atlantic City Alliance (ACA) must be evaluated to determine whether it is fulfilling its original purpose.

d) Reduce Municipal Administrative Costs and ensure financial stability for the school system. The state can require these cost savings through its Transitional Aid powers, and MOU with the city.  The state will have to take a pro-active role to ensure financial stability for the school system, including proper oversight.

e) Casinos will be required to provide a baseline health care and retirement package for its employees.

All of this would sunset after 15 years, and after 13 years, a commission would be established to review the City’s situation and determine its future needs.

2014 Tax Levy:                                                                         $377,000,000

Reductions in Municipal/School Expenses                                  $72 million

Funding Required in 2015:                                                         $305 million

The Plan (By The Numbers):

Casino PILOT                                                    $150 million (annually for the first two years)

Re-Directed IAT payments (from casinos)                                   $25 million

Property tax from non-casino properties                                     $130 million

TOTAL REVENUES:                                                                 $305 million