Public Finance Wonkery
Of all the taxes being paid by the casino 2% of it's gross terminal revenues is slated to go to the city, another 2% is slated to go to the county. The city's budget and 5 year plan anticipate the following revenues to come from the casino.
2010: $7.3 mil
2011: $12.7 mil
2012 and onward: $10 mil/year
OK. You might say there is a bit of a problem with that. Only some has been transferred to the city as yet, but since opening the casino has been accruing on average $315 thousand a month in taxes which the city will eventually receive. $315 thousand/month comes to what? $3.7 million or so annually. Just a tad short of $10 million. It's actually half of the conservative $7.3 million antiticpated this year.
That's not a problem in itself. The law covering all this says that the city will get either 2% of the gross revenues generated at the casino or $10 million per year... whichever is greater. So the city will be getting it's $10 million no matter.
But there is an interesting question on timing. When is that shortfall in the promised $10 mil being put in the mail? Not quite sure where the $7.3 million estimate for this year came from. It still is a far cry from the $3.7 million annual rate that looks like what the tax is accruing currently, but for sake of argument you have to start with something. I'm pretty sure the $12.7 million anticipated in 2011 is the combination of $10 million expected to be generated directly from the casino taxes and an additional $2.7 million that is to be made up from the shortfall the year before.
So.... what if in 2011 revenues via the 2% tax still come out to something under $4 million? They will get that and you hope a check to make up for what didn't add up to $10 million the year before. If it really is $2.7 mil, add that to $4 mil and you are still under 7 mil... So a net shortfall of over $5 million. In some long run steady state the law should guarantee $10 mil. annually. If revenues down at the casino don't ramp up pretty quickly there is some double counting of how much will accrue in the near term. I bet (no pun intended) there isn't going to be a year when the casino generates $10 million a year directly plus sends a check for the shortfall the year before. At the current rate the shortfall is on the order of $6 million split somehow between budget years 2010 and 2011.
So again, assuming some big upswing in casino revenues does not happen real soon, the state mandated tax will not reach anywhere close to the $10 million slated for the city. How this all plays out depends a bit on when the check will show up for the shortfall. The promise is $10mil/year, but what definition of a year? Calendar year? Fiscal year? The state's fiscal year or the casino's fiscal year? and subsequent to whatever year is used, how long before the casino must send in a check for the shortfall? I'm sure that given their low revenues of late, plus their new property tax assessment, that they are dying to send another big check to anyone soon. This shortfall is going to be replicated with the county as well.