- Posted August 28, 2014 by
Atlantic City to take $2 billion hit
Three casinos in Atlantic City are closing their doors for good by September this year, dealing a $2 billion blow to the city’s property-tax values for next year. Analysts predict that the drop in property taxes will worsen as time goes on, by some accounts settling more than 50% lower than the $20 billion value reported in 2009.
This drop in property-tax values comes on top of their already established decline and is in sharp contrast to those who like to play casino in Las Vegas. So far, they have dropped more than 30% to approximately $14.5 billion, due in large part to gaming houses requesting lower taxation rates to reflect their decreased profitability. The city has said it plans to compensate for the reduced value of its gross property-tax base by raising residential and business property taxes.
Atlantic City’s financial troubles are by no means recent.The amount of money generated by the area’s casinos has been in steady decline since 2006. In 2013, they posted revenue of $2.86 billion, as compared to over $5 billion collected in 2006. This reflects a decline of 45% in less than a decade.
The closing of Showboat, Trump Plaza, and the Atlantic Club will have repercussions far beyond the immediate drops in the city’s property-tax base and US gambling related revenue. After these casinos shut their doors, approximately 6,500 people will lose their jobs. This figure represents about 25% of the state’s casino employees, many of whom expect to have a difficult time finding employment because of their highly specialized skillset.
Another of the area’s gaming houses, Revel Casino, filed for bankruptcy over the summer, and has also announced plans to shut down by mid-September. This closure is expected to put an additional 3,000 out of work. The city’s already high unemployment rate of 13.1% is expected to climb due to the collective impact of these layoffs.
High unemployment rates tend to reduce state and local revenue. The long-term effects of jobs lost due to the casino closings are sure to further exacerbate Atlantic City’s financial freefall. According to the New York Times, the State of New Jersey’s Department of Labor and Workforce development is developing plans to offer training to the newly unemployed, but just how the city plans to reconcile its growing debt and falling profits remains to be seen.