On appeal from the Superior Court, Appellate Division, whose opinion is reported at
The opinion of the court was delivered by: Stein, J.
The primary issue posed by this appeal concerns the constitutionality of the investment alternative tax provision enacted as part of the 1984 amendments to the Casino Control Act (Act), L. 1984, c. 218, §3, and codified at N.J.S.A. 5:12-144.1. A related issue involves the constitutionality of 1993 amendments to the Act, L. 1993, c. 159, that established a minimum charge of $2.00 per day for motor vehicles parked on property owned or leased by a licensed casino hotel, N.J.S.A. 5:12-173.2, and imposed a fee of $1.50 per day for the use of such parking spaces payable by the casino hotel for the use of the Casino Reinvestment Development Authority (CRDA) to be expended on eligible projects in the corridor region of Atlantic City. See N.J.S.A. 5:12- 173.3 and .4. We sustain the constitutionality of the challenged statutory provisions.
A brief overview of the constitutional issue may be helpful to an understanding of the Discussion to follow.
The challenged statutory provisions are alleged to violate the 1976 casino gambling constitutional amendment, N.J. Const. art. IV, § 7, ¶ 2 (Casino Amendment or Amendment). That amendment was approved by the voters in November 1976 and permitted the Legislature to authorize the operation of gambling casinos in Atlantic City:
"It shall be lawful for the Legislature to authorize by law the establishment and operation, under regulation and control by the State, of gambling houses or casinos within the boundaries, as heretofore established, of the city of Atlantic City, county of Atlantic, and to license and tax such operations and equipment used in connection therewith. Any law authorizing the establishment and operation of such gambling establishments shall provide for the State revenues derived therefrom to be applied solely for the purpose of providing funding for reductions in property taxes, rental, telephone, gas, electric, and municipal utilities charges of, eligible senior citizens and disabled residents of the State, and for additional or expanded health services or benefits or transportation services or benefits to eligible senior citizens and disabled residents, in accordance with such formulae as the Legislature shall by law provide. The type and number of such casinos or gambling houses and of the gambling games which may be conducted in any such establishment shall be determined by or pursuant to the terms of the law authorizing the establishment and operation thereof." [N.J. Const. art IV, § 7, ¶ 2(D) (emphasis added).]
Pursuant to the Casino Amendment, the Legislature in 1977 passed the Casino Control Act, L. 1977, c. 110. Consistent with the amendment, the Act imposed an annual eight percent tax on every casino's gross revenues, N.J.S.A. 5:12-144, but uniquely defined gross revenue in terms of the "take" from gaming operations, i.e., the "total of all sums . . . actually received by a casino licensee from gaming operations, less only the total of all sums paid out as winnings to patrons and a deduction for uncollectible gaming receivables . . . ." N.J.S.A. 5:12-24. Casino operating expenses were excluded from consideration in the definition of gross revenue. Consistent with the Casino Amendment, the proceeds of that tax were to be deposited in a separate account known as the Casino Revenue Fund and used exclusively for programs benefitting eligible senior citizens and disabled residents. N.J.S.A. 5:12-145. The 1977 legislation also required casino licensees to make capital investments in Atlantic City and elsewhere in the State, commencing five years after the first calendar year of operation in which a casino's annual gross revenue as above defined exceeded its cumulative investments in the State during that year. N.J.S.A. 5:12-144(b). The required annual investments in land and improvements, either promoting the tourist industry or in projects approved by the Casino Control Commission (Commission), were required to be in amounts not less than two percent of annual gross revenue. N.J.S.A. 5:12-144(b) to (d). Failure to make the required investments would subject the licensee to an annual investment alternative tax equal to two percent of gross revenue and payable to the Casino Revenue Fund. N.J.S.A. 5:12-144(e).
As a result of the five-year deferral of casino licensees' investment obligations under the 1977 legislation, little or no such investments by casino licensees were made during the seven years after the Act took effect. In 1984, L. 1984, c. 218, the Legislature revised the prospective investment obligations of casinos and also established the Casino Reinvestment Development Authority, N.J.S.A. 5:12-153, endowing the CRDA with broad powers to encourage casino licensees to make economically and socially desirable investments in Atlantic City and throughout the State. N.J.S.A. 5:12-160. To facilitate the CRDA's discharge of its statutory responsibilities, the Legislature provided casinos with the option of either paying an additional annual 2.5 percent investment alternative tax on gross revenues as defined by N.J.S.A. 5:12-24, or of investing annually 1.25 percent of such gross revenues in CRDA bonds or in investment projects approved by the CRDA. N.J.S.A. 5:12-144.1. We will describe in more detail the precise investment alternatives made available by the 1984 legislation later in this opinion. Infra at ___-___ (slip op. at 31-34). The CRDA's 1998 Annual Report indicates that since the 1984 amendments to the Act the aggregate amount of investments made by casino licensees in Atlantic City and throughout the State as of December 31, 1998, was approximately $550 million dollars. By way of comparison, from the inception of casino gambling until December 31, 1998, the amount of State revenues received and dedicated to eligible senior and disabled citizens was approximately $3.5 billion dollars.
In addition, the Legislature amended the Act in 1993, L. 1993, c. 159, to generate funding for road improvements in the Atlantic City "corridor region" (the road network connecting the Atlantic City Expressway with the Boardwalk). N.J.S.A. 5:12-173.1 to .8. As noted, the Legislature established a minimum charge of $2.00 per day for casino parking spaces and required casino licensees to pay $1.50 per day for each used parking space to the CRDA. N.J.S.A. 5:12-173.2 to .4. Proceeds from the parking fees are to be used by the CRDA for projects "related to improving the highways, roads, infrastructure, traffic regulation and public safety" in the corridor area of Atlantic City. N.J.S.A. 5:12-173.4
In this litigation, as in the prior litigation instituted by Trump Hotels & Casino Resorts, Inc. (Trump) in 1997 in the United States District Court, Trump contends that the proceeds of "investments" authorized by the 1984 amendments to the Act as credits against the 2.5 percent investment alternative tax constitute "State revenues" within the meaning of that term as used in the 1976 Casino Amendment, and that accordingly such proceeds unconstitutionally have been diverted away from the eligible senior citizens and disabled residents that were intended by the Casino Amendment to be the sole beneficiaries of such "State revenues." Trump advances the same contention about the proceeds of the parking fees authorized by the 1993 legislation, contending that those proceeds also constitute "State revenues" that have been diverted from senior and disabled citizens in violation of the 1976 Casino Amendment. The federal litigation has since been dismissed. While it was pending, CRDA and the State instituted this suit seeking a declaratory judgment that the proceeds of casino investments made pursuant to the 1984 legislation and the proceeds of the 1993 parking fee legislation do not constitute "State revenues" within the meaning of the Casino Amendment. Trump seeks a declaratory judgment that the use of such proceeds in accordance with the 1984 and 1993 amendments to the Act violates the Casino Amendment.
Although the events that apparently prompted Trump's institution of the federal litigation are irrelevant to our resolution of the constitutional issue, in the interest of completeness we include the Law Division's explanation of the events leading up to this litigation:
"The litigation arises in the context of a dispute between Trump and plaintiffs over actions taken in connection with the development of a major new casino hotel project in Atlantic City by Mirage Resorts Incorporated ("Mirage"). At present, two casinos -- Trump's Castle and Harrah's -- operate in the northern, bayside section of Atlantic City, known as the Marina District. Immediately to the west of Trump's Castle sits a 178-acre parcel of land ("H-Tract"), most of which is owned by Atlantic City. That parcel, part of which was formerly a solid waste landfill, offers a prime location for multi-casino development. In order to make the H-Tract suitable for multi-casino development, however, at least two significant problems must be addressed. First, the H-Tract, as a former municipal solid waste landfill, is in need of environmental remediation. Second, the current city streets linking the Marina District to the Atlantic City Expressway are inadequate to handle the increase in traffic that new development would bring. A direct highway link between the Expressway and the Marina District would be required.
On May 3, 1996, following receipt of competitive proposals for development of the H-Tract, Atlantic City entered into an agreement ("the Development Agreement") with Mirage, a Trump competitor, in which Mirage agreed to develop a multi-casino complex on the H-Tract. As part of that contract, Mirage agreed to assume full responsibility for remediating any environmental contamination at the site. Upon completion of the remediation and the opening of business on the site, part of Mirage's remediation costs may be reimbursable under the Remediation Act.
In addition, pursuant to the Development Agreement, Mirage's obligation to take title to and develop the H-Tract is contingent on the State agreeing to construct an adequate highway connecting the Marina District to the Atlantic City Expressway. To that end, the State signed a contract with Mirage on January 10, 1997, in which the parties agreed to construct "the Westside connector," a 2.2 mile highway linking the Marina District to the Expressway. Although it would appear that all businesses in the Marina District and the neighboring City of Brigantine will benefit from the construction of the Westside connector, Mirage has agreed to offset a significant part of the costs of constructing this public road through a contribution of $55 million in cash for the road project. Additional financing will come from the South Jersey Transportation Authority ("SJTA") which will issue bonds collateralized, in part, by $55 million in CRDA approved investment tax credits under the Casino Reinvestment Act and revenues from parking fees to be collected under the Parking Fee Act once the new casino hotels are operating.
The plan was challenged by Trump through a complaint filed in the United States District Court. In that action Trump asserted:
Defendants have agreed and resolved to violate Art. IV, § 7, ¶ 2 of the New Jersey Constitution -- which strictly limits the use of revenues derived from the establishment and operation of casinos solely to the reduction of certain charges, and increase in certain benefits, to senior and disabled citizens of New Jersey . . . .
a. By using sales tax revenues from casino hotels to be built on the H-Tract to reimburse Mirage, pursuant to the Remediation Act, for up to 75 percent of the costs of its environmental cleanup of the H-Tract;
b. By using State revenues from casino parking fees and from casino investment alternative tax obligations to repay and collateralize bonds issued by SJTA to fund the design and construction of the Westside connector." [State v. Trump Hotels & Casino, 314 N.J. Super. 651, 655-56 (Law Div. 1997).]
The Law Division rejected the constitutional challenges asserted by Trump. Id. at 678-79. The Appellate Division affirmed, 314 N.J. Super. 536 (1998), substantially for the reasons expressed by Judge Williams in the Law Division. Id. at 539. Trump appeals to this Court as of right. R. 2:2-1(a).
To the extent that the legislative history of the Casino Amendment may bear on the resolution of the issues before us, we shall take advantage of Judge Williams's extensive description of portions of that history in his opinion for the Law Division:
"That analysis must begin with a review of the legislative history of the amendment. On January 19, 1976 Assembly Concurrent Resolution No. 126 was introduced by Assemblymen Perskie and Kupperman from Atlantic County. The measure proposed amending the Constitution of the State [of] New Jersey to allow for casino gambling in Atlantic City. The casino amendment proposal represented an attempt to deal with the serious deterioration of Atlantic City. At one point, Atlantic City's access[i]bility and central location in the heavily populated metropolitan corridor combined to make the city one of the major convention centers and seaside resorts in the United States. However, the city failed to maintain this prominence. By 1970, the city showed signs of serious decline. The population had decreased significantly, the unemployment rate was high, housing required replacement or rehabilitation, and the number of hotel rooms had substantially decreased. See Barbara P. Lampen, The Role of Legalized Gaming in New Jersey as a Stimulus for Tourism and Urban Redevelopment: A Regulator's Viewpoint, 6 Seton Hall Legis. J. 55 (1982).
The public hearing on ACR-126 by the Assembly State Government and Federal and Interstate Relations Committee elicited extensive testimony on the conditions in Atlantic City and the reasons for seeking constitutional authorization of casino gambling. A sampling of this testimony is set forth below.
• [R]ecent employment figures indicate that the unemployment rolls now claim . . . 37 percent of a once proud host town. Since 1970, we have experienced a loss of more than 15 major hotels, motels and restaurants which employed in excess of 3,500 employees. In a four-year period mercantile licenses have declined from 3,568 to 2,986 -- a barometric indicator of what is happening to our business community -- or a loss of 582 mercantile licenses and another additional loss in employment approximating 4,100 people . . . . Welfare [rolls] have swelled to an all-time high and the people of this state are paying for that. Due to business failures and an inability to pay, our uncollected taxes in Atlantic City alone are at a high of $6,846,922. As a matter of interest, we are currently budgeting $4 million for uncollected taxes in 1976. In 1975 we were only able to collect 82 percent of our total taxes . . . . Coupled with this fact is an increase in our tax rate of 57 percent in four years due to a decline in ratables . . . . Pure and simple, we are on an expressway to disaster and we will become a ward of the state. It is well known that we are no longer able to accommodate many of the larger national conventions, our very lifeblood. We are trying to support 50,000 people on a ten week economy and this . . . is impossible. We no longer attract the much needed investment to rejuvenate our tired city. We have to expand to a 52 week economy.
[Thomas Coggins, President of the Greater Mainland Chamber of Commerce. Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on ACR-126, April 14, 1976, at 16A.]
• As one city decays, such as what is happening in Atlantic City, it spreads like cancer into surrounding areas and the reverse is true of a healthy city. We revitalize Atlantic City; we help the entire state. We have lost over 400 properties in Atlantic City, forcing the citizenry to pay a higher tax rate. Casino gambling could help replace those empty lots with good tax-paying property. Atlantic City is . . . desperately in need of boosting our tourist industry.
[Pierre Hollingsworth, Commissioner, City of Atlantic City. Id. at 35.]
• You will hear city officials here who will explain to you that we have an 80 percent collection rate on property taxes -- which property tax is approaching a $9 rate. You will hear that we have some 20-25 percent of the land in Atlantic City no longer on the tax rolls. You will hear from . . . officials of the Housing Authority who have been trying to market a large tract of land that [it] is difficult, if not impossible, to attract the investment capital to build in Atlantic City. You will hear from some of the merchants and some of the working people, the labor people in the Atlantic City community who will say that without this kind of proposal they have no resources with which to attract the kind of investment capital that will give us again the type of full-based tourist economy upon which the people of Atlantic City can build . . . . We have to have [casinos] if we are to continue to survive as a viable economic force, as part of this State, as the linchpin of the second largest industry in this State which is the tourist industry. We cannot do it alone. We ask nothing of the people of the State of New Jersey by way of dollars and cents. We ask only that they authorize this proposal to allow us to pull ourselves up and to invest in our own community and to attract the kind of capital that will enable us to accomplish that.
[Assemblyman Steven Perskie, Prime Sponsor of Assembly Resolution No. 126. Id. at 3.]
• Here is a chance for the State to take one of its cities, which is having a problem . . . and without the expenditure of a dime, without any funds being appropriated from the budget, without any other part of the budget being cut to put funds into Atlantic City, with the passage of this law we can bring an entire area back to where it should be, and not only bring the area back to where it should be, and bring it out of the red and into the black, but we can derive a benefit to the entire State of New Jersey. I think most of the people who will testify here today will talk about the benefit to Atlantic City. I don't think that can be emphasized enough.
[Assemblyman Howard Kupperman, Second Prime Sponsor of ACR-126. Id. at 7.]
• [T]he one that is nationally and internationally recognized is Atlantic City. It is a Mecca, just as, let's say, Las Vegas is . . . . Recall, if you will, it took Las Vegas 35 years to get to the stage they are today. This did not occur overnight, and even should this pass, should Atlantic City get gambling, we do not anticipate an immediate resurgence of Atlantic City. It is going to be an incentive, a keystone, to attract capitalization to a resort, and attempt to rebuild it.
[Senator Joseph McGahn. Id. at 12.]
• We are talking specifically about the legalization of casino gambling in Atlantic City for a specific purpose, and that specific purpose is the revitalization of the tourist industry in Atlantic City. And that is what we think we need, and that is what this bill is geared at.
[Charles Worthington, County Executive of Atlantic County. Id. at 17.]
The legislative history, which is replete with references to the problems facing Atlantic City, indicates that the revitalization of Atlantic City was a primary concern of those supporting the constitutional amendment. It was envisioned that this revitalization would come in the form of a rejuvenated tourist industry, increased employment, capital investment, and much needed urban redevelopment. It is instructive to note that one of the prime advocates for adoption of the amendment, was a group calling itself the Committee to Rebuild Atlantic City. Young v. Byrne, 144 N.J. Super. 10, 15, 364 A.2d 47 (Law Div. 1976).
A second purpose to be achieved by the amendment was to raise revenue to benefit senior and disabled citizens. How this revenue would be raised was addressed by co-sponsors of the casino amendment during the public hearing before the Assembly State Government and Federal and Interstate Relations Committee on ACR-126. Assemblyman Kupperman noted, "There will be profits derived from casino gambling, not only for Atlantic City, but for the State. The State will have a take from the very top, and this money very specifically is set forth." Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on ACR-126, April 14, 1976, at 6.
Senator McGahn, co-sponsor of the identical Senate version of ACR-126, in response to a question regarding anticipated casino revenues, made reference to a feasibility study conducted by Depodwin Associates, Inc. Id. at 9. That study, entitled Feasibility of Casino Gaming for New Jersey, which was available to members of the committee, was conducted, among other things, "to assess the merits of adding casino gaming as a source of revenue for New Jersey . . . ." Id. at 2. Significantly, the Depodwin study, which evaluated various forms of taxation used in several major countries that had legalized gambling casinos, concluded, "Our proposed choice is a straight tax on the winnings of the casino." Id. at 19. This tax was chosen because it provided a simple, inexpensive means of collection. The study found, "The most popular form of taxation is a tax on the gross revenues from casino gaming obtained from operators, i.e., the winnings of the house. Use of this base avoids detailed calculations of deductions and subsequent audits." Id. at 19. The Conclusions of the study were later reflected in the testimony of Assemblyman Steven Perskie at a public hearing before the Assembly State Government and Federal and Interstate Relations Committee on the Casino Control Act. The Assemblyman proposed a straight tax on gross revenues from gambling and commented, "Before arriving at the figure of 8 percent, we looked at some of the tax structures that exist in other jurisdictions and we tried to make a simplistic tax structure that would be a little easier to administer . . . ." Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on A-2366, December 15, 1976, at 8.
A similar focus on the State deriving its dedicated revenue from gambling activities was expressed by Charles W. Davis, Executive Vice President of the New Jersey Hotel-Motel Association, which commissioned the Depodwin study. He stated, "ACR-126 must be looked upon with favor, since the revenue derived from legalized gambling will be dedicated to our senior citizens." Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on ACR-126, April 14, 1976, at 35A (emphasis added). While testimony concerning revenues to be devoted to senior and disabled citizens was less extensive than that related to Atlantic City's redevelopment, nevertheless every witness who dealt with the subject focused on revenues derived from gambling itself as the source for state taxation. That such an understanding was commonplace prior to the vote on the referendum is further evidenced in Young v. Byrne, 144 N.J. Super. 10, 364 A.2d 47 (Law Div. 1976). The court, in dealing with declaratory judgment actions brought to determine the constitutionality of ACR-126, observed, "ACR-126 specifically earmarks the gambling revenues to a special fund for senior citizens and disabled residents of New Jersey." Id. at 19, 364 A.2d 47. All of the pre-referendum comments focus solely on revenues derived from gambling activities as the source of dedicated funds for senior and disabled citizens.
Legislative action immediately after passage of the referendum is consistent in reaffirming and reinforcing the pre-referendum understanding. Following the passage of the casino amendment in November 1976, the same Legislature moved promptly to consider the enabling legislation. On November 22, 1976, Assembly Bill No. 2366, known as the Casino Control Act, was introduced by Assemblymen Perskie and Kupperman. Six weeks following the passage of the casino amendment, on December 15, 1976, the Assembly State Government and Federal and Interstate Relations Committee held a public hearing to consider testimony on the bill. Further evidence of the intent and purpose of the casino gambling amendment can be gleaned from both the testimony at hearings as well as from the text of the legislation itself.
Perhaps nowhere is the legislative intent of the casino amendment, with respect to the redevelopment of Atlantic City, more clearly articulated than in the actual text of the Casino Control Act of 1977. [N.J.S.A.] 5:12-1. The Legislature declared that legalized casino gambling was approved by the citizens of New Jersey as a unique tool of urban redevelopment for Atlantic City. N.J.S.A. 5:12-1(b)(4). The Legislature further noted:
[T]he introduction of a limited number of casino rooms in major hotel convention complexes, permitted as an additional element in the hospitality industry of Atlantic City, will facilitate the redevelopment of existing blighted areas and the refurbishing and expansion of existing hotel, convention, tourist, and entertainment facilities; encourage the replacement of lost hospitality-oriented facilities; provide for judicious use of open space for leisure time and recreational activities; and attract new investment capital to New Jersey in general and to Atlantic City in particular. [Id. (emphasis added).]
That the Legislature viewed casino gambling as a means toward redevelopment rather than simply as a revenue raising measure or as an end in itself was clearly evidenced in the Casino Control Act which provided:
Restricting the issuance of casino licenses to major hotel and convention facilities is designed to assure that the existing nature and tone of the hospitality industry in New Jersey and in Atlantic City is preserved, and that the casino rooms licensed pursuant to the provisions of this act are always offered and maintained as an integral element of such hospitality facilities, rather than as the industry unto themselves that they have become in other jurisdictions. [N.J.S.A. 5:12-1(b)(5).]
This is consistent with the testimony of Senator McGahn in the public hearing on the casino amendment. He commented, "Now, nationwide today there are any number of states that are exploring gambling by the State as a means of increasing revenue. We do not consider this, to be perfectly honest with you, as primarily a revenue producing measure." Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on ACR-126, April 14, 1976, at 29A.
The redevelopment theme was manifest in the statutory scheme adopted by the Legislature. One of the early redevelopment strategies employed by the Legislature focused on the development and upgrading of the inventory of hotel rooms in Atlantic City. The Legislature mandated that no casino hotel could be licensed unless it contained at least 500 sleeping units meeting certain minimum statutory standards. N.J.S.A. 5:12-27, -83. Another strategy adopted by the Legislature required a licensee to make capital investments in approved projects or face the prospect of an additional tax. N.J.S.A. 5:12-144(b) [to] (e). Specifically, a licensee, whose gross revenues exceeded the cumulative investments in the State during a particular year, was obligated to make additional investments of at least 2 percent of their gross revenues. N.J.S.A. 5:12-144(b). Failure to make such investment within five years would subject the licensee to an investment alternative tax in an amount equivalent to 2 percent of the gross revenue. The Legislature contemplated that these investments would be used for the following:
[T]he improvement, furtherance, and promotion of the tourist industry in this State through the planning, acquisition, construction, improvement, maintenance and operation of recreational, entertainment, and other facilities for the public, including, without limitation a performing arts center, the beaches and shorefront of this State, and transportation facilities providing or enhancing service in resort areas of this State, or . . . the improvement, furtherance, and promotion of the health and well-being of the people of the State through the planning, acquisition, construction, improvement, maintenance, and operation of a facility, project or program approved by the commission. [N.J.S.A. 5:12-144(d).]
The proposed Casino Control Act explicitly addressed the goal of providing economic assistance to senior and disabled citizens. The Act provided for an 8 percent tax on gross revenue which was to be dedicated to eligible senior citizens and disabled residents. N.J.S.A. 5:12-144(a) and 5:12-145. The 8 percent tax was to be derived solely from "gaming operations." N.J.S.A. 5:12-24. It was clear, however, that casino hotels would be responsible to pay other taxes levied against businesses in New Jersey as well. This Conclusion finds support in the testimony of the measure's supporters and critics alike.
Assemblyman Perskie, in discussing why an 8 percent tax was preferable over a 12 percent tax, noted:
As I understand it, the Governor has commissioned some individuals in the Department of Treasury to focus on this whole [tax] structure. Before arriving at the figure of 8 percent, we looked at some of the tax structures that exist in other jurisdictions and we tried to make a simplistic tax structure that would be a little easier to administer, for example, than Nevada that has a county, local and a state tax, a set of table fees and what not. We also tried to provide a sufficiently sizable figure that would generate substantial revenue for the constitutionally-dedicated purpose, yet also keep in mind the economic realities of the casino industry . . . . So the direct answer to your question is I think that the 8 percent is a realistic figure. If it can be shown that 12 is a realistic figure, considering all of the criteria I have just articulated, I could support it. But I rather suspect, upon investigation, you will find, structuring the tax, as it is, on gross revenues as opposed to net revenues, and providing in any event that the casino operators are going to be paying the corporate business tax in New Jersey or the personal income tax, whichever is applicable, and the property taxes and all of the other taxes that we have, that this is a realistic figure.
[Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on Assembly Bill No. 2366, December 15, 1976, at 8 (emphasis added)[.]]
Even the opponents of gambling did not question that the Legislature could impose taxes or collect fees which would not be dedicated to seniors and the disabled. Dr. Samuel Jeanes, a leading opponent of gambling, commented:
Now, if the entire 8 percent promised to our disabled and senior citizens is not paid to them, I believe our lawmakers will have broken faith with these citizens who have served our State so well. This was a promise and that promise ought to be kept. These gambling casinos are privately owned and privately operated, and there is no reason why the State should pay one penny of the taxpayer's money to assist their operation. So we would recommend that the 8 percent tax on gross revenues of the casinos be allocated entirely for senior and disabled citizens as was promised and that an additional tax, not less than that now being paid by the racetracks of New Jersey, be levied on the gross revenue of the casinos to pay the cost of the administration of this act. [Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on Assembly Bill No. 2366, December 15, 1976 at 73 (emphasis added).]
It appears that in 1976 both supporters and opponents of gambling alike understood that the constitutionally dedicated funds would come only from this 8 percent tax on gross gambling revenues and that additional taxes or charges on other aspects of casino hotel operations were not required to be dedicated to support for seniors and the disabled.
In addition to the 8 percent tax on gross revenues, the Casino Control Act imposed a fee for the issuance or renewal of a casino license, N.J.S.A. 5:12-139, and a licensing fee on slot machines, N.J.S.A. 5:12-140. The revenues from these fees were to be deposited in the Casino Control Fund for the operating expenses of the Casino Control Commission and the Division of Gaming Enforcement. N.J.S.A. 5:12-143. Furthermore, the Act required payment of the corporate business tax, N.J.S.A. 5:12-148(b), and casino licensees were also required to pay unemployment compensation taxes to the State. N.J.S.A. 43:21-7.
The common understanding at that time was later reflected in a 1982 article, Casino Gambling: The Elements of Effective Control, 6 Seton Hall Legis[.] J. 55 (1982), by R. Benjamin Cohen, former General Counsel and Director of the Legal Division of the Casino Control Commission. In discussing both the casino amendment, and the Casino Control Act, Cohen noted:
Pursuant to the authority of [the casino gaming amendment] the Legislature enacted the Casino Control Act which was signed into law on June 2, 1977, by Governor Brendan T. Byrne. This law was the culmination of legislative initiative, months of study by a Staff Policy Group on Casino Gambling designated by the Attorney General and the State Treasurer at the Governor's request, a report by the Commissioner of Investigation, and a good deal of debate and Discussion in the state Legislature . . . .
In addition to the revenues generated by increased corporate business taxes, property taxes, state and federal income taxes, sales taxes and luxury taxes, the Casino Control Act imposes an eight percent tax on the gross revenues of the casinos. This gross revenues tax is deposited into a special account known as the Casino Revenue Fund. Moneys in this fund are appropriated exclusively for reductions in property taxes, rentals, and utilities charges of eligible senior citizens and disabled residents of New Jersey. The cost of the governmental regulation of the casino gaming industry is borne by the industry itself in the form of license fees rather than by tax dollars. [Id. at 3-5 (emphasis added).]" [Trump Hotels, supra, 314 N.J. Super. at 663-73.]
The legislative history of the Casino Amendment described in Judge Williams's opinion resolves some but not all of the questions that are collateral to our resolution of this appeal. That history demonstrates clearly that the rehabilitation of Atlantic City as a tourist and resort center was a fundamental if not the primary objective of the sponsors of the Casino Amendment and the Casino Control Act, even though the constitutional dedication of the proceeds of the tax on casino wagering for the benefit of senior and disabled citizens was a crucial element of the Amendment and the primary inducement used to solicit voter approval of the Amendment. Less clear is whether the sponsors intended that the rebirth of Atlantic City would occur simply as an indirect byproduct of the authorization of casino gambling, as Trump contends, or whether the Legislature intended and the public understood that legislatively mandated investments by the casinos were an integral part of the plan to revitalize Atlantic City. Fairly read, the legislative history of the Casino Amendment and the Casino Control Act suggests that the contemporary understanding, at the time the Casino Amendment was submitted to the voters in November 1976, was that legislatively mandated investments in Atlantic City were part and parcel of the overall legislative design. As noted, when first enacted in 1977 the Casino Control Act required all casinos whose annual gross revenue exceeded their cumulative investments in the State to make annual investments in land and real property improvements in Atlantic City and other parts of the State, commencing after five years had elapsed, equal to two percent of gross revenues. Failure to make such investments would expose the casinos to liability for an additional two percent tax on gross revenue, payable to the Casino Revenue Fund for the benefit of senior and disabled citizens. N.J.S.A. 5:12-144(c).
Direct evidence that the legislatively mandated investment mechanism was a matter of public record before the Casino Amendment was approved by voters is revealed by the transcript of the public hearing on the Casino Control Act. Assemblyman Steven Perskie, the Act's sponsor and a strong proponent of the Casino Amendment, testified in part as follows:
"I think what should be in the legislation is the articulation of the kinds of commitments that we made in support of this referendum question to the people of New Jersey, and for which they voted on November 2nd. It was no accident that Assemblyman Kupperman, Senator McGahn and I, and the Committee to Rebuild Atlantic City under the chairmanship of Mayor Lazarow, quite deliberately and quite intentionally, released what is in essence this bill, on September 30, 1976. . . . There are some changes and there will be others, but it is essentially the same bill. That was no accident. We did that quite deliberately in order to make some specific kinds of commitments to the people of New Jersey." [Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on Assembly Bill No. 2366, December 15, 1976, at 9-10.]
Accordingly, there appears to be incontestable evidence that at least the sponsors of the Act and the Casino Amendment, and in all likelihood the Legislature as a whole, understood contemporaneously with the approval of the Amendment, or very shortly thereafter, that the dedication of eight percent of gaming revenues to senior and disabled citizens was intended to coexist with a legislative mechanism designed to compel investment in Atlantic City or elsewhere by imposing on casinos that failed to make such investments an additional two percent tax on gaming revenues. Unanswered by the legislative history, but to be resolved by this Court, is the constitutionality of the mechanism included in the 1984 amendment to the Act that induces casinos to make approved annual investments equal to 1.25 percent of gross revenues by imposing as an alternative to such investments an additional 2.5 percent tax on gaming revenues payable to the Casino Revenue Fund.
The Casino Control Act's legislative history also suggests that the legislative understanding of the critical phrase "state revenues derived therefrom" contained in the Casino Amendment was that such revenues were only those to be derived from the proposed eight percent tax on the casino's winnings or "take." At the public hearing on the Casino Amendment, Assemblyman Kupperman, a co-sponsor, observed: "There will be profits derived from casino gambling, not only for Atlantic City, but for the State. The State will have a take from the very top, and this money very specifically is set forth." Public Hearing before Assembly State Government an Federal and Interstate Relations Committee on ACR- 126, April 14, 1976, at 6. At the same hearing, Senator McGahn, a co- sponsor of the Senate version of the Amendment, responding to a question about estimated State revenues from casino gambling, id. at 9, referred to a study prepared by DePodwin Associates, Inc. entitled Feasibility of Casino Gaming for New Jersey. That study, conducted to "assess . . . the merits of adding casino gaming as a source of revenue for New Jersey," id. at 2, apparently recommended a tax imposed directly on casino winnings: "Our proposed choice is a straight tax on the winnings of the casino." Id. at 18. The study stated: "The most popular form of taxation is a tax on the gross revenues from casino gaming obtained from operators, i.e., the winnings of the house. Use of this base avoids detailed calculations of deductions and subsequent audits." Id. at 19.
As noted by Judge Williams, supra at ___-___ (slip op. at 20-21), Assemblyman Perskie, testifying at the public hearing on the Casino Control Act, elaborated on the decision to incorporate in the legislation an eight percent, rather than a twelve percent, tax on casino winnings:
"We also tried to provide a sufficiently sizable figure that would generate substantial revenue for the constitutionally-dedicated purpose, yet also keep in mind the economic realities of the casino industry.
So the direct answer to your question is I think that the 8 percent is a realistic figure. If it can be shown that 12 is a realistic figure, considering all of the criteria I have just articulated, I could support it. But I rather suspect, upon investigation, you will find, structuring the tax, as it is, on gross revenues as opposed to net revenues, and providing in any event that the casino operators are going to be paying the corporate business tax in New Jersey or the personal income tax, whichever is applicable, and the property taxes and all of the other taxes that we have, that this is a realistic figure." [Public Hearing before Assembly State Government and Federal and Interstate Relations Committee on Assembly Bill No. 2366, December 15, 1976, at 8.
The clear implication of the testimony at the public hearings concerning both the Casino Amendment and the Casino Control Act is that the sponsors, and in all likelihood the Legislature, understood that the revenue contemplated for dedication to senior and disabled citizens would be the proceeds of a tax -- initially at an eight percent rate -- levied on the gross winnings of casinos. In addition, the understanding was that the proceeds of other taxes paid by the casinos -- corporate business taxes, property taxes, sales taxes -- were not to be considered State revenue derived from "the establishment and operation of . . . gaming establishments" for purposes of the Casino Amendment's dedication of State revenue to eligible senior and disabled citizens. Informed by the legislative ...