Weaning the city, or feeding by the spoonful?
On April 2, 2009, per the TNT, the city council directed the city manager to wean the city from its dependence on gambling revenue.
Same old/new business around town
The proposed budget for 2010 however, seven months later, expects that source of dollars to remain consistent at $3M. Actually it is apparent that the contribution of gambling to the general fund is now 8.3 percent, up from 7 percent in 2008, making this industry number four in players at the revenue table. So, in the interest of integrity, what is the plan by which the council intends to keep its promise?
The entire concept of weaning the city from gambling revenue is actually not possible without the elimination of casinos…..or the elimination of the gambling tax…..actually both. There is no other way apparently. The problem with elimination of the gambling tax while casinos remain in business would be political suicide. If it weren’t for the money, people would immediately turn on the casinos for what they are: a drain on the rest of the economy. Eliminating casinos would cut off revenues to the city and council members won’t let that happen. So we have a dilemma.
Another alternative exists. A trust fund can be set up as part of the reserve into which gambling revenue can in increasingly greater percentages be placed as part of a reserve not to be spent for a length of time (5-10 years?) and only then for long term capital projects to which the city will commit today. During this period gambling revenue will become an increasingly smaller and smaller part of the general fund (and larger part of the trust fund) until entirely eliminated. In that year it is eliminated, the city council can vote to close casinos in time certain eliminating both the casino and gambling revenue simultaneously. For instance in a 5 year plan the following could happen (based upon current projections of gambling revenue and city budgets)
Year GF Budget$ Gambling Tax$ Trust fund$ GFGambling Revenue$ Gambling%GF
2010 $37M $3M 20% ($600K) $2.4M 6.5%
2011 $38M $3.2M 40% ($1.3M) $1.9M 5.0%
2012 $39M $3.4M 60% ($2M) $1.4M 3.6%
2013 $41M $3.6M 80% ($2.9M) $700K 1.7%
2014 $42M $3.9M 100% ($3.9M) $0 0%
Thus casinos could be eliminated in 2014 or 2015 at the latest and have no impact on the general fund budget. Additionally the trust fund containing between $6.9M (4 years) and $10.7M (5 years) would be available for council us to fund major capital projects (hopefully planned during the 5 years that gambling is on its way out) rather than burning through this money on an annual basis to pay for operating expenses….i.e. living beyond government’s means.
This can be done only if the council has the guts to stand up to the city manager, staff and casinos, begin gradual budget cuts and has the self discipline to leave the trust fund alone for the alloted time and then only use it for the intended purpose. The temptation will be to tap the trust fund to cover operational costs but I think a firm commitment to future capital projects will tie the council’s hands…..they’d know that a day of reckoning was coming and there better be a big chunk of money in that fund to pay for it.
Hope this lays out a viable alternative to doing nothing with a wink and a nod about “weaning” by the current council.