Atlantic County must pay an extra USD 6.8M for Atlantic City tax refund

The state Attorney General’s Office ruled that the county has to pay $6.8 million to Atlantic City for the successful tax appeal for 2009 and 2010. The county will pay $3.3 million this year for 2009 and $3.5 million next year for 2010.

That means the county will increase its 2016 tax rate by 1.7 cents per $100 of assessed value that includes the general purpose, library, public health and open space taxes. The average homeowner will now pay another $6 toward the general purpose tax.

“Unfortunately, the taxpayers once again take the hit,” County Executive Dennis Levinson said in a statement. “Our budget was adopted on March 22, 2016 with a slight decrease in the overall tax rate as well as a 1.2-cent decrease in the general purpose tax. With this latest development, the tax rate will now increase.”

Borgata won its 2009-10 property tax appeal in state tax court in 2013, and the city took the case to appellate court, where it lost in July 2015. It then appealed to the state Supreme Court, which declined to hear the case last fall.

County freeholders adopted the $201 million budget with a tax decrease but acknowledged at the time that successful tax appeals or Atlantic City’s fiscal crisis could change the numbers.

The problem, according to Levinson, was that the county had prepared the budget without being told by Atlantic City that the state Supreme Court had declined to hear the case.

The issue was brought to the state Attorney General, who ruled that the county would have to pay an extra $3.3 million this year and $3.5 million next year instead of doubling the $6.3 million already going to Atlantic City this year.

“We had no idea of the finalized amount of the Borgata settlement with interest, Levinson said. “To add insult to injury, Atlantic City still owes the Borgata $88 million more in refunds for tax appeals from 2011 through 2014 that is excluded from the PILOT legislation.”

The PILOT legislation, which was passed by the state legislature last month as part of the Atlantic City rescue package, bars casinos from appealing property taxes by allowing them to make fixed payments instead of taxes for 10 years.

Under the bill, the casinos will collectively pay the city $120 million a year as long as casino revenues stay at current levels.
Tax appeals for 2011-2014 are still outstanding.

Meanwhile, Levinson said that the tax rate has been changed to account for the refund.

“As soon as we were notified by the state and adjusted our figures to account for the additional refund to the Borgata, we wanted to advise the municipalities and the public of what they could expect,” he said. “No one wants to be the bearer of unpleasant news, but the taxpayers need to understand the reason for the change in the tax rate.”