Saturday, January 31, 2015

Why is Christie bailing out a casino?

If New Jersey is so cash-strapped, why is Gov. Christie giving a $261 million tax break to a half-built casino in Atlantic City?

Why is Christie bailing out a casino?

Gov. Christie announced Tuesday that New Jersey will invest $260 million in the Revel Casino project, allowing work to resume. Senate President Stephen Sweeney (D., Gloucester) is at left. (Tom Gralish / Staff Photographer)
Gov. Christie announced Tuesday that New Jersey will invest $260 million in the Revel Casino project, allowing work to resume. Senate President Stephen Sweeney (D., Gloucester) is at left. (Tom Gralish / Staff Photographer)

Gov. Christie has made waves in his short time in office by railing against high property taxes, teachers’ salaries and pensions, and exorbitant state spending.

His tough talk has resonated with many voters who are upset with tax hikes, government waste, increased debt, overspending, and federal bailouts.

At one town-hall meeting last year, Christie told a woman who opposed cuts to the local library: “Unlike the United States of America, the state of New Jersey can’t print money.” At another gathering, Christie said the state would “go broke” if his plan to cap property taxes wasn’t implemented.

So, if New Jersey is so cash-strapped, why is Christie giving a $261 million tax break to a half-built casino in Atlantic City?

Just imagine the claims of socialism if a Democratic governor wanted to give public money to a private company in a sweetheart deal. But Christie, a darling of the GOP, called the $261 million tax reimbursement plan for the Revel Casino an “investment.”

From a public-policy standpoint, for the state to “invest” in a business that makes its profits off of gambling losers is a bad precedent. Likewise, it doesn’t make sense for the state to be a partner with a casino, which it also regulates.

Nor should New Jersey be in the business of trying to pick winners and losers in any private industry. That goes against everything a free-market champion like Christie supposedly stands for.

Even more troubling, of all the possible investments, helping to bankroll a casino in Atlantic City these days seems like a bad bet. The 11 casinos there have experienced steady drops in revenue in recent years due to the weak economy as well as increased competition from Pennsylvania, Delaware, and other states.

The Resorts casino in Atlantic City defaulted on its mortgage and was taken over by its lenders in 2009. The Hilton Casino Resort there is losing millions of dollars and is trying to fight off foreclosure.

It’s difficult to see how putting another casino in Atlantic City will improve the sagging fortunes of the industry in New Jersey. If anything, it’s more likely to further cannibalize the existing gambling business in Atlantic City, cutting into revenue at other casinos in that town even more. Surely, Revel’s competitors would like a similar deal.

Christie believes the lavish Revel casino will attract more gamblers to Atlantic City, and help boost the industry’s sagging tax revenues for state coffers.

Part of the argument for the state to offer the tax incentive to Revel — which doesn’t include any money up front — is the thousands of permanent and construction jobs the project will create. That’s especially attractive to state Senate President Stephen Sweeney (D., Gloucester), who is also a South Jersey labor leader. Pleasing Sweeney may help Christie on other big issues where he needs the Senate leader’s support.

So, is the Revel deal really more about good politics than good economics?

To be sure, Christie has made improving the fortunes of Atlantic City a top priority. There are certainly things the state could do to better market the resort town and attract a broader customer base. But giving a $261 million tax incentive to one flagging casino is not the best use of the state’s resources. A tough-talking governor focused on holding others accountable should know that.

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