Balancing New Taxes & Public Safety in an Insolvent City

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eBlog, 1/26/17

Good Morning! In this a.m.’s eBlog, we consider the ongoing challenge in Atlantic City—the city taken over by the State of New Jersey—but where the path back to solvency remains blurry. Yesterday New Jersey General Assembly Speaker Vincent Prieto proposed a bill to set a $2 dollar per room hotel surtax as one option to help address the city’s fiscal dilemma.

Helping Out. New Jersey Assembly Speaker Vincent Prieto (D-Secaucus) has proposed state legislation under which Atlantic City would receive temporary authority to impose a $2 surcharge on hotel rooms in the city—a move the Speakers says would be important to avert any police or firefighters layoffs—layoffs which he is apprehensive Governor Chris Christie’s administration is seeking as a step in the state’s takeover of the city. Under his proposed bill, A4556, the authority to impose the tax would be for a two year period—revenues raised would only be available for public safety expenditures. In introducing the bill, the Speaker noted: I was adamant that any state takeover of Atlantic City not involve, among other things, police and firefighter layoffs that would threaten public safety and the city’s effort to market itself as a safe and family-friendly destination, but not everyone agreed…the harsh reality is now setting in, sadly, but I will not stand idle and allow police and firefighter layoffs to harm public safety for residents while also hurting the public’s ability to feel confident about visiting the city…Atlantic City must remain successful for the betterment of the entire state.” The proposal creates its own potential dilemma: because the city’s hotels currently remit state, luxury, casino, occupancy, and promotion taxes and fees—would still another increase create the potential to overprice rooms and discourage tourists? According to Atlantic City’s convention bureau, the city’s hotels already remit some of the highest room taxes in the country—so, for a city where tourism is the key driver for the city and its recovery, the fiscal question might be: would this be a tax too far?

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