Beware of government fixes

Beware of government fixes
Written by Seth Grossman


Republican Gov. Chris Christie said the new Revel Casino is the “key” to Atlantic City’s rebirth. Christie worked with Republicans and Democrats in the state Legislature to give this casino project $261 million in state tax breaks over the next 20 years. Those future tax breaks were then used as collateral to borrow about a third of the $1.2 billion needed to finish the project.

But existing casinos like Resorts and Trump Marina that were worth more than $400 million a few years ago were just sold for less than $40 million each. The Hilton is for sale and can’t find a buyer. And MGM needs another year to unload its half of the Borgata.

How will the taxpayer bailout of the failed Revel Casino project play out? Will the new Revel Casino lose money and go under because it has six times the debt burden of competing casinos? Or will it “succeed” and knock four or five older casinos out of business? Either way, Atlantic City will soon have vacant casinos to go with its empty baseball stadium and near-empty Boardwalk and Convention Halls – all paid for by taxpayers to “create jobs” and “fix” the local economy.

Last March, Republican Lieutenant Gov. Kim Guadagno was in Atlantic City with a plan for state government to “save” the tourist business in New Jersey. State government is spending $9 million this year “to promote tourism,” and another $15.8 million on grants to dozens of “arts” organizations around the state. Where is this $24.8 million coming from? From a new 5 percent tax added to the 7 percent sales tax on every hotel and motel bill in the state.

Hotel and motel visitors already pay higher prices in New Jersey than in Delaware, Maryland and Virginia because our real estate taxes are so high. The 12 percent total tax on top of that adds insult to injury. Every hotel and motel owner I know tells me they would much rather do without any “help” from the state if they could knock off half of the 12 percent tax on their customers.