AC And Borgata At odds Over Tax Refund
ATLANTIC CITY (CBS) -- The latest financial crisis for Atlantic City involves a $62 million tax refund due to the Borgata hotel and casino. They're asking a judge to force the city to pay up within 30 days.
That only covers two years of tax appeals. All told, the Borgata is owed over $150 million. Atlantic City missed a weekend deadline to make the $62 million payment.
So what's next?
Rutgers-Camden finance professor Rich Michelfelder suggests a number of scenarios, one of which is filing for bankruptcy. Another would involve going to Wall Street.
"Floating a bond when you're in dire straits is going to be, I don't know if it's difficult. It's just a matter of how much you have to pay in interest on that bond," Michelfelder told KYW Newsradio. "So that's one route but that's not going to happen in two weeks. That takes months."
But at the end of the day, he suggests none of the options are all that attractive. "It looks like there are three alternatives," he said. "One they can borrow the money. Two they can, quote, borrow the money if the state takes them over. And three they can increase tax rates."
That last one could prove to be a problem, given the city's already had two recent large real estate tax hikes. "You increase taxes? People and business leave. You increase taxes again? People and business leave and it just keeps on going downhill."
One final option, and it is drastic, would find Atlantic City filing for bankruptcy protection.
For his part, Michelfelder believes a state bailout might be the quickest way to address the current situation but there is no suggestion officials in Trenton are ready to go that far. Governor Chris Christie already intervened early this year, bringing in a team of financial experts who did not suggest bankruptcy as an alternative.
Borgata officials, in a statement provided to KYW Newsradio, said they are "simply asserting our rights as a taxpayer to receive a refund of overpayments." They also note that other casinos that also appealed their tax bills have received their refunds and given Atlantic City's long term financial problems, pinning the blame on the Borgata would be "inaccurate and wrong."
City officials say they are working on ways to alleviate the current situation.
