N.J. Senate Oks Tax Breaks for Casinos hit by Coronavirus
Below is an article written by Samantha Marcus and published by NJ Advance Media on June 15, 2020.
New Jersey lawmakers voted for a scaled back set of tax breaks for Atlantic City casinos on Monday after social services providers for the elderly and people with disabilities warned the first version of the plan endangered funding for their programs.
Casinos have been shuttered since mid-March to slow the spread of the coronavirus in New Jersey. Gov. Phil Murphy has said he hopes to allow them to reopen by July 4th. But they’re already feeling the financial effects of the pandemic crisis, as casino revenue plummeted 69% in April, marking the worst month on record. Tens of thousands of casinos employees have been laid off.15
The legislation permanently expands the tax deductions casinos can take for promotional gaming credits and reduces the tax liability for one year on gross revenue if a casino suffered revenue losses on its brick-and-mortar operations during the pandemic.
Casinos also would be able to defer their licensing payments to the state until six months after they’re permitted to reopen and $500 licensing fees imposed on every slot machine would be waived until June 30, 2021. It’s all part of a package of tax relief lawmakers said is needed to help casinos bounce back from more than three months of lost business
Under the amendments passed Monday, though, casinos will have to pay hotel and parking fees due to the state and that tax break on gross revenue will last one year instead of two.
“The goal of this bill is strictly to get this industry up and running faster so they can start supporting our programs,” said Senate President Stephen Sweeney, a bill sponsor. “Right now they’re not generating much of anything.”
The bill also includes a passage directing $100 million from the state’s federal CARES Act stimulus funding toward loans or grants for small businesses .
The nonpartisan state Office of Legislative Services said it could not estimate the total potential loss of state revenue on the bill, as introduced, but said provisions that suspend parking, slot machine, hotel and tourism fees could cost $66 million through the next two fiscal years.
County social services officials cautioned at a Senate budget committee last week that the bill would put at risk funding for programs that serve senior citizens and people with disabilities, including paratransit, adult protective services, vocational rehabilitation, and hearing aide and pharmaceutical assistance.
The Casino Revenue Fund, the depository for casino tax revenue, is required to support seniors and people with disabilities.
“This bill does have really some unintended consequences to it, especially rural transportation,” Carol Novrit, Sussex County Health and Human Services administrator, told the Senate Budget and Appropriations Committee. “Without that we cannot get them to life-saving dialysis. We can’t get them to their chemotherapy appointments. We can’t get them to the food stores so they have something to eat.”
Sweeney, D-Gloucester, said Monday that while the bill reduced dollars flowing into the Casino Revenue Fund, the simple fact that casinos are closed and may struggle once they reopen will have a detrimental effect on the fund.
“It’s a reduction in how much they’re going to contribute,” he said, adding “The fact is, it’s going to be a reduction anyway because the casinos aren’t operating at full capacity.”
Amendments made to the bill would require those paratransit services be given priority when the Casino Revenue Fund is doling out its aid in the next fiscal year.
The bill passed 27-4. It has not yet passed the Assembly.
Sen. Richard Codey, D-Essex, said in a testy exchange with the Senate president that the Legislature was playing favorites by singling out the casino industry for tax and fee cuts when all Garden State businesses are hurting, and Sen. Shirley Turner, D-Mercer, similarly argued the state has not been so generous with other taxpayers.
“I think it’s unfair and I think that as usual it is the corporations that are getting all of the consideration,” she said. “And what about these people who can’t pay their property taxes, and they’re going to end up having liens placed on those properties, and they’re not working, and they’re going to find that they’re going to be foreclosed on?”
But casinos are not like other businesses and are not taxed like other industries, argued Sen. Mike Testa, R-Cumberland.
“We need casinos to be dealt with separately, because for 30 years the state of New Jersey has layered special tax upon special tax on this industry,” he said. “The taxes that are being waived here are simply special taxes. “Obviously, we’ve amended the bill, we’ve made it correct in my humble estimation and it should absolutely go forward.”
Money on the table. Grab it.May 4, 2020