NEW YORK, Aug 22 (Reuters) - Atlantic City’s tax base, facing the loss of a third of its casinos including the shining new Revel Casino Hotel, is likely to shrink next year to half of what it was in 2010, the city’s finance chief said.
The erosion of the property tax base, in the most well-known U.S. gambling city after Las Vegas, has been steep and fast. It is expected to fall to an anticipated $10 billion or less in 2015 from $20.5 billion in 2010, Atlantic City’s Revenue and Finance Director Michael Stinson told Reuters in a phone interview.
“We don’t think any other town ... certainly no other town in New Jersey, has seen both in dollar amount and percentage decreases (a similar fall) in such a short period of time,” Stinson said.
The city has compensated by hiking the tax rate and reducing its payroll, but it may be running out of ways of preventing its revenue from taking a big hit.
Casinos comprise the majority of the city’s taxable property base. But within the past year, four have announced closings, which will strip $1.9 billion, or 17 percent, from the city’s $11.3 billion 2014 tax base, according to Moody’s Investors Service.
Revel, a Las Vegas-style resort touted by Gov. Chris Christie as a new model for Atlantic City, is currently in its second bankruptcy since opening in 2012 and will close after the last guest leaves on Sept. 1. Increased gaming in neighboring states, especially Pennsylvania, has weakened Atlantic City’s market, and the pressure is expected to continue.
“It will be a challenge for the property tax levy to remain stable as taxable values are falling off the rolls and closing down,” said Moody’s analyst Vito Galluccio.
Homeowners have taken up much of the slack, so the amount of revenue for schools and city operations has remained relatively steady. As casinos falter, the city raises the tax rate, which shifts more of the burden onto the city’s already stressed residents and other businesses.
A third of the city’s 39,500 residents live in poverty, and the unemployment rate was 13.1 percent non-seasonally adjusted in June, compared with 6.3 percent for the nation. The city’s median income is just under $30,000 - less than half the statewide level.
And things are getting worse. The four most recent expected casino closures combined will wipe out at least 7,000 jobs, said Moody’s, which cut Atlantic City’s debt rating to junk in July.
Atlantic City properties were revalued in 2008, based on 2007 values. At the time, casinos made up 80 percent of the city’s tax base, but they now comprise about 65 percent because of their lower values, Galluccio said.
That has contributed to tax hikes. As of this month, the total property tax rate for an Atlantic City homeowner, including school and country taxes, has risen 85 percent since 2010, to an estimated 3.357 per $100 of valuation. (Reporting by Hilary Russ; Editing by Bernard Orr)