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NJ Supreme Court Judge Grants a 90-day Stay of Axed Atlantic City Tax Breaks
By Jeff Osienya Oct 20, 2022 LegalityA Supreme Court judge in the Garden State has granted a 90-day stay on his decision to axe 2021 PILOT law amendments. In the ruling, the judge admitted the legitimacy of the State’s case but disputed the validity of their arguments.Judge Michael Blee of the Superior Court in New Jersey has ruled in favor of a request to temporarily hold off his previous ruling that struck down changes to the Atlantic City casinos’ property tax law. According to The Press of Atlantic City, an NJ local newsroom, Judge Blee granted the State a 90-day stay of his decision on August 29.
The August ruling deemed that the 2021 amendments to the 2016 payments-in-lieu-of-taxes (PILOT) law violated the Garden State’s Constitution. According to the NJ Superior Court judge, the PILOT law changes were passed on debatable grounds after Liberty and Prosperity nonprofit called the changes to question in a lawsuit. Additionally, the judge said that the amendments were made to offer casinos significant tax breaks that would benefit the gaming industry instead of having a public interest.
Following the Superior Court’s rejection of the amendments, Governor Pete Murphy’s office announced on October 11 that the NJ State would appeal the ruling. Come Friday, October 14; Judge Blee granted his August ruling a 90-day stay after a two-day hearing of the State’s arguments. However, he said that the stay depended on either the NJ Supreme Court or Appellate Division Court considering the case on an emergent or fast-tracked basis. So, the extension will only be applicable if one of the two courts fails to make a timely ruling.
What Informed Judge Michael Blee’s Temporary 360?
In late July, as the PILOT law amendment litigation continued, Judge Michael Blee ruled that the Garden State had breached its 2018 agreement with Atlantic County. As such, the State was ordered to make a $2,362,500 shortfall payment to the county within five days of the court’s July 29 ruling.
Furthermore, the judge also demanded that the State pay more significant sums to Atlantic City County quarterly, ruling that the first payment be made on August 15. The initial July 29 ruling was followed by the final blow to the State and Atlantic City casinos, which came on August 29.
However, the State, through the Governor’s office, fought on immediately after the August decision. In its arguments during the recent October proceedings, the State requested a stay to “maintain the status quo.” The State cited that without it (the stay), the city’s and county’s finances would be left in chaos as the sum of money they stood to receive from the PILOT program was unclear.
In his Friday (October 14) ruling, Judge Blee pointed out that he granted the 90-day stay based on the constitutionality of the State’s request. Per NJ law, statutes from the State legislature are presumed to be passed per the State constitution. Simply put, according to the law, the State automatically has an edge in such a matter.
Part of Judge Blee’s ruling on Friday, according to reports from The Press of Atlantic City, read:
Quote“Statutes are afforded a presumption of constitutionality that can only be rebutted ‘upon a showing that the statute’s repugnancy to the Constitution is clear beyond a reasonable doubt,”
Judge Blee Still Strongly Disagrees with the State on Two Counts
While the Superior Court judge admitted to the strength of the State’s case, he added that he strongly opposed the opination of NJ State attorneys on two other points of their arguments.
First, Judge Bree wrote in his recent ruling that New Jersey lacked a reasonable likelihood of success on the merits of the PILOT law amendments. Secondly, according to Judge Blee, the State’s arguments failed to show that the city and the county would end up suffering ‘immediate, substantial, and irreparable harm’ should a stay not be granted.
In his ruling, Judge Blee wrote:
Quote“The crux of Defendants irreparable harm claim is that this Court’s Order nullifying the 2021 Amendment as unconstitutional and reverting to the 2016 Amendment destabilizes the greater Atlantic City area as well as the casino industry and subsequently infringes on the State’s sovereignty interests.”
Moreover, the Superior Court judge also pointed out that the Atlantic City numbers disproved their argument, noting that:
Quote“This Court’s previous order nullified the 2021 Amendment and reinstated the 2016 Amendment, which included internet gaming revenue in the calculation of the casinos’ PILOT payment. It is mathematically undisputed that the 2016 amendment provides the City and the County more revenue than the nullified 2021 Amendment, thus avoiding the destabilization of municipal and county governments in the greater Atlantic City area.”
So, even though there wasn’t much weight in the State’s case based on these two arguments, the constitutionality of their position tilted the scales and got them the 90-day reprieve.
Either way, the status quo for Atlantic City casinos will stay in place until the NJ Supreme Court determines the lawfulness of the 2021 PILOT amendments. Furthermore, there’s a good chance that the current stay will be granted an extension until the Appellate Court issues the final ruling.
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