Atlantic City, New Jersey owes local casino the Borgata over $150 million in tax refunds. Currently, the city is on a court ordered payment plan to pay back the debt, but on December 8th the city missed a payment of $62.5 million. The missed payment was for Borgata’s tax refund from the years 2009 and 2010.
Borgata has asked the Superior Court Law Division to order Atlantic City to pay the $62.5 million installment with interest and within 30 days. Borgata has also requested that the city pay for legal fees that Borgata incurred during this process.
Joe Lupo, Borgata’s Senior Vice President, expressed his frustrations about the debt to the Associated Press:
“We are simply asserting our rights as a taxpayer to receive a refund of overpayments. We are also disappointed that the city is focusing solely on us its attempt to resolve the situation. Atlantic City has paid refunds to every other property, except Borgata.”
How poorly is Atlantic City really doing?
Atlantic City Mayor Don Guardian has said the city absolutely cannot pay the debt, and that forcing it to pay it would bankrupt the city. The city has a long-standing history of fiscal troubles. Atlantic City is currently unable to apply for a bond or even receive government relief until it proves fiscal responsibility.
Currently, there is a financial assistance package that consist of $60 million in government aid. The package has passed the Legislature and awaits Governor Chris Christie’s signature.
Many city officials are concerned that the Borgata may attempt to seize city assets if the city cannot pay the refund installment. Lupo told the Press of Atlantic City that blame cannot be placed on the Borgata for the city’s inability to pay its debt.
“The city is in this situation because of decades of fiscal mismanagement and wasteful spending by the city of Atlantic City.”
Lupo has also been emphasizing Borgata’s place in the Atlantic City community in most of his conversations with the media – it is both the city’s biggest employer and its biggest tax payer.
What happens next?
The city will await the judge’s decision on whether or not the court will order the debt to Borgata to be paid within 30 days. If the court does rule in favor of the Borgata’s request, the city will come dangerously close to having to declare bankruptcy to comply with the court order.
Mayor Guardian stated to the Press of Atlantic City that the court request is unfair:
“[The city is] not going to allow [Borgata] to not pay taxes or to be able to siphon money from our accounts. The rest of Atlantic City shouldn’t have to pay for the city debt to the Borgata.”
The decline of Atlantic City began in 2006 when casinos in surrounding states, and especially Pennsylvania, began operating. Since then, the city’s gambling market has been nearly cut in half, dropping from $5.2 billion to $2.7 billion.
The Borgata is the highest earning casino and has been for several consecutive years. In 2015, the Borgata Casino earned almost $680 million in revenues – almost twice what 2nd place Harrah’s earned.