Joel Naroff, left, of Naroff Economic Advisors, and Michele Siekerka, president and CEO of the New Jersey Business and Industry Association

TRENTON, NJ—New Jersey voters split the decision on two ballot questions in Tuesday's elections, resoundingly defeating a proposal to extend casino gambling into the northern part of the state, while approving a ballot question that dedicates the state's newly increased gasoline tax for use only in the parched Transportation Trust Fund.

The statewide vote against the casino gambling question was not surprising, given the troubles facing Atlantic City following the effective collapse of the gaming industry there. Despite enthusiasm from some commercial developers, voters decided to ring-fence the industry where it is, in the southern resort city.

As previously reported by GlobeSt.com, Miles Berger of the Berger Organization, was hoping to bring casino gambling to a property his firm owns on Broad Street in Newark. Berger remained adamant that expanding gambling to northern New Jersey makes economic sense for the state.

“My belief is the disparity in the vote had to do with the fact that the foreign investors in other casino locations in Pennsylvania, Connecticut and New York overwhelmingly influenced the public through their negative advertisements which were not true and not correct,” he told GlobeSt.com in a phone interview. “The citizens of New Jersey believed, based on what they saw, that a yes vote had the ability to cause economic harm to the state, whereby taxes would go up and services to seniors would go down. Of course that's not true.”

Berger says he believes the question will be back on the ballot in 2018 and will pass at that time. He dismisses concerns about diluting casino business in Atlantic City by creating casinos up north.

“If the casino business in Atlantic City is already being stolen by other states, maybe we just have to realize that,” he says. “Why punish the rest of the state and not allow casino gambling in a market 22 minutes from New York on public transit?”

More than 2.2 million votes opposed to the expansion of gaming vs. about 643,000 votes in favor, according to the New Jersey state government election results website.

Atlantic County, the only county in the state that currently has legal gambling, voted 89,956 against the measure, with only 6,065 in favor. Essex County, which would have been the site of several proposed casinos, also soundly defeated the measure, by more than a 2-1 margin, 143,544 votes against vs. 55,302 votes in favor.

Casino gambling has had a tortured economic history in recent years, with many casinos in Atlantic City failing, changing hands, and laying off thousands of residents, with devastating effects on the city's economy.

“We are grateful to the voters of New Jersey, who by soundly defeating this constitutional amendment, spoke loudly and clearly that gaming belongs in Atlantic City, period,” Debra P. DiLorenzo, chairwoman, No North Jersey Casinos Coalition, tells GlobeSt.com exclusively. DiLorenzo is also president of the Chamber of Commerce of Southern New Jersey, which did not take a position on the gasoline tax question. “The Coalition will remain active over the next election cycle to continue the dialogue on why the expansion of gaming to North Jersey is a bad idea for our State.”

Late Wednesday, the state's Local Finance Board voted unanimously to authorize a state takeover of Atlantic City's finances for at least five years, NJ.com reported. Five casinos have closed in the seaside resort since 2014, with a catastrophic effect on the city's budget because of the reduced tax base. NJ.com says the closings cost the city, already half a billion dollars in debt, another $100 million in lost revenue.

“This was a proposal whose time never should have come,” Joel Naroff, president of Naroff Economic Advisors and a consulting economist to TD Bank, tells GlobeSt.com exclusively. “The Northeast gaming market is already largely saturated and the impact on the greater Atlantic City economy would have been devastating. It is doubtful the new casinos come close to generating enough additional revenues and economic activity to pay for all the lost local governments taxes and also cover the added social costs that would result from Atlantic City casino closings. Allowing casinos to open in North Jersey made little economic sense and the voters recognized that.”

The second question asked voters to commit the recent increase in the gasoline tax to funding the Transportation Trust Fund, which had been starved of replenishment for many years. Voters narrowly approved the measure, by a vote of 1,512,741 to 1,302,876.

The measure had the support of Gov. Christie, and in a late twist was opposed by his Lt. Gov., Kim Guadagno, who raised concerns that the measure could lead to uncontrolled borrowing for transportation projects by the legislature.

Supporters of the ballot measure worried that without dedicating the tax to the TTF, legislators and the governor might be tempted to use the gas tax proceeds for general fund obligations, continuing to neglect the state's ailing roads, bridges, and mass transit systems.

Earlier this year, Tom Bracken, the chairman of the New Jersey State Chamber of Commerce, called for the tax increase and expressed serious concern about the state's infrastructure hurting its economic competitiveness.

Because the state's constitution requires the governor to present a balanced budget each year, New Jersey's government has a history of relying on one-shot, balance transfer actions to meet that goal, and funds intended for one purpose have frequently been diverted to the general fund to cover the shortfalls.

One governor who proposed funding the perennial shortfalls with tax increases, James J. Florio, was denied a second term by voters, so the state's politicians are reluctant to seek increased tax revenues.

The fatal crash of an NJ Transit commuter train at the Hoboken train terminal in late September, while not directly related to physical plant deterioration, nevertheless raised the profile of the parlous state of the region's transit infrastructure.

That led to a compromise by Gov. Chris Christie and the state legislature that raised New Jersey's gasoline tax by 23 cents a gallon, from one of the lowest in the nation, to one of the highest.

“Approval of Question 2 means the funds collected for transportation infrastructure will be used for their intended purpose,” says Michele Siekerka, New Jersey Business and Industry Association president and CEO, who also spoke exclusively to GlobeSt.com. “No one likes that we had to increase the gas tax, but the revenues generated by it ensure that we will have a continuing pool of money dedicated to transportation, and the amendment ensures that the mistakes of the past that made a gas tax inevitable will not be repeated.”

“It was critical that all the funds from the gasoline tax be dedicated to the Transportation Trust Fund,” Naroff says. “Maintaining a modern, high quality transportation infrastructure is key to New Jersey's economic future and the Trust Fund desperately needs the money. It is not even clear the new tax will be able to generate enough funds to build and maintain the state's transportation network. Allowing some of the funds to be diverted to other uses, in a state that has been fiscally stressed for two decades, was a prescription for failure. It was necessary to make sure as much money as possible went into the Trust Fund and voters understood that need.”

More than 2.2 million votes opposed to the expansion of gaming vs. about 643,000 votes in favor, according to the New Jersey state government election results website.

That led to a compromise by Gov. Chris Christie and the state legislature that raised New Jersey's gasoline tax by 23 cents a gallon, from one of the lowest in the nation, to one of the highest.

Instant Insights /

NJ Voters Say 'No' to North Jersey Casinos and 'Yes' to Dedicating Gas Tax for Transportation

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