As reported by: The Associated Press
One year after dealing them a round of tax hikes, Gov. Jim McGreevey offered a kinder hand to casinos yesterday, promising $92 million for capital construction projects at the gambling halls.

The money -- $60 million of which would be borrowed -- would go toward construction of new hotel rooms and other non-casino amenities at the 12 casinos, which sorely need more rooms to cope with demand.

Atlantic City casinos can grow if they expand their 14,249-room inventory and add more entertainment offerings, McGreevey said during an appearance at Harrah's Atlantic City casino.

"To do that, we have to transform Atlantic City from a day-trip opportunity to a place in which we bring our families to stay an extended period of time. To do that, we obviously need more hotel rooms. So our budget is investing $92 million for capital construction projects in Atlantic City casinos, to help meet the necessary demands for increased rooms.''

The $60 million would be borrowed against receipts from the state's casino hotel tax beginning in 2007, according to McGreevey. The other $32 million would come from a rebate on a net profits tax the state imposed on casinos last year.

The move marks the latest instance in which McGreevey proposed borrowing money against future tax revenues.

As part of the $26.2 billion state budget he proposed in February, McGreevey asked to raise taxes on cigarettes and use that money to repay part of a $1.5 billion loan. At the time, he made no mention of the casino incentives.

Wall Street analysts have faulted McGreevey's tactics recently, saying they jeopardize the state's credit rating.

The casinos' capital construction incentives would be placed in a fund administered by the state Casino Reinvestment Development Authority, to be shared with all 12 casinos on room expansions and other non-casino improvements.

The goal is to underwrite up to 25 percent of the cost of non-casino expansion projects, the idea being that the new business generated will help the casinos and the state, which gets an 8 percent cut of the casinos' annual gross revenues.

The casinos, which enjoyed 93 percent occupancy last year, still turn away cash-paying would-be customers in favor of giving rooms away to gamblers they know they can count on to spend big at the tables and slot machines.

Historically, gamblers who stay the night spend more than those who drive in or take buses.

"Rooms add profits,'' said Dave Jonas, senior vice president of Atlantic City operations for Harrah's Entertainment. "They grow the business, they grow the market. And this is a room-constrained market.''

Jonas took the opportunity to announce "conceptual plans'' for a $200 million Harrah's expansion that would add a 700-room hotel tower, a restaurant, a spa and a nightclub.

The plans have yet to be approved by the Harrah's Entertainment board.

The $92 million windfall wasn't the only gift for casinos yesterday.

The state Casino Control Commission announced plans to rebate $3.3 million to casinos because of overpayments made for regulatory agencies.

The CCC and the state Division of Gaming Enforcement, which regulate the casinos, are operated with money from licensing fees and assessments on them.

That brings to $8.3 million the amount in rebates received for the overpayments. In January, before a year-end audit was completed, the state gave back $5 million to the casinos.