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Judge rules in county's favor in request for PILOT law reconsideration

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A Superior Court judge on Monday upheld a previous judge’s ruling that changes to a payments-in-lieu-of-taxes law for Atlantic City’s casinos violated a 2018 court settlement with Atlantic County.

Superior Court Judge Michael J. Blee denied the state’s request for reconsideration in his ruling, siding in favor of Atlantic County officials, who’d sued the state in December after a bill that amended the casino PILOT program became law, cutting the share of the county’s tax revenue by as much as $26 million over the next five years, according to county estimates.

“Everybody in this county ought to take a victory lap,” Atlantic County Executive Dennis Levinson said in an interview following the court’s decision early Monday.

Judge Joseph Marczyk, in a Feb. 25 decision, had said the new PILOT law violated a June 2018 consent order agreed to by the state and the county. His order did not enjoin the state from implementing the new PILOT law “except to the extent they are subject to sanctions and/or damages.”

The State, however, challenged his order and filed on March 17 a motion for reconsideration. In an April 25 hearing considering that motion, Ron Israel, an attorney for the state, argued that Marczyk jumped ahead in the legal process by ruling that the June 2018 consent order agreement had been breached.

Marczyk’s opinion should have been restricted to whether the law should be prevented from taking effect, according to Israel, who said the state had no idea the contract breach issue would be argued so it had not prepared that defense.

Blee disagreed. The state’s latest effort “ignores the fact that Judge Marczyk gave the parties notice at least one month prior to the hearing that the issue of breach would be discussed,” he wrote in his opinion issued Monday. He also pointed out the state did in fact present to Judge Marczyk an argument against claims it breached the consent order.

The Governor’s Office declined to comment.

“Now you have two judges, Marczyk and Blee, who are in agreement that the State was wrong and that the taxpayers of this county were being treated extremely shabbily,” said Levinson, who added the county plans to seek compensatory damages.

Blee, who had been designated by the state Supreme Court as the Assignment Judge for Atlantic and Cape May counties in March, took over the case from Marczyk, who has been temporarily reassigned to the Appellate Court. Usually, motions for reconsideration are heard by the same judge that issued the order in question.

Instead of traditional property taxes, Atlantic City casinos have paid PILOT since 2017. The original casino PILOT law was enacted to help stabilize Atlantic City’s finances, after successful casino property tax appeals and increased regional gaming competition nearly bankrupted the city.

Under the consent order, 13% of PILOT funds were due to the county each year.

Late last year, a bill passed that removed online sports betting and internet gaming from gross gaming revenue, a figure that helped determine the industry’s total annual PILOT payment as well as the portion assigned to each casino.

The change, in turn, would result in Atlantic County receiving between $15 million and $26 million less through 2026, according to the county.

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