RAINING MONEY: Some NY communities could fund budgets with casino fees
by: Amanda Renko
Windfalls of cash don’t come to the Town of Nichols very often.
The 2,700-resident, largely agricultural Tioga County community has operated on a shoestring budget of about $1.5 million for years.
So when it received a $1 million payment in 2016 from the license fee Tioga Downs paid to the state to become a full-fledged casino in December, Town Supervisor Kevin Engelbert thought of a few things that needed attention.
A new tandem-axle truck and wheeled excavator replaced 25-year-old highway equipment. The Cady Library, a landmark dating back to the 1820s, was slated for safety and energy efficiency upgrades. Long-neglected roads will be widened and given a fresh surface. And, Engelbert says, residents will get some tax relief, too.
So far this year — through the end of May — casino taxes for Nichols totaled nearly $600,000. On an annual basis, particularly with warmer weather luring out gamblers, the fees from Tioga Downs could equal the full town budget.
In northern Seneca County, the Town of Tyre recently began reaping the monetary rewards of the new del Lago Resort and Casino, which opened in February. So far, Tyre has generated monthly revenues ranging from $175,000 to more than $211,000.
And the new-found deluge of money doesn’t stop with the host communities. Counties that include Broome and Chemung are getting casino money.
Despite the influx of cash, many local leaders say they’ll use their quarterly checks to fill gaps in their budgets, instead of going all in with one-time expenses.
The money locals get comes from a tax the state imposes on the gross gaming revenues of the three non-Indian casinos to open so far — Tioga Downs, del Lago, and Rivers Casino and Resort in Schenectady.
New York imposes a tax of 37 percent on casinos’ gross gaming revenues — the difference between players’ bets and wins, minus any promotional credits given out — for slots and electronic table games, and 10 percent on revenues from table games.
New York retains 80 percent of the Tioga funds for statewide education and property tax relief. In April, that figure came to $1.55 million, leaving nearly $400,000 for distribution to the host town and county and surrounding counties.
April’s payouts netted $97,213 for the Town of Nichols and Tioga County, $104,347 for Broome County, $52,831 for Tompkins County, $21,639 for Chemung County, $10,412 for Wayne County and $5,196 for Schuyler County.
The surrounding counties receive even more money from del Lago, which in April had $13.15 million in total gross gaming revenues — more than twice that of Tioga Downs.
The payouts add up for communities facing declining revenues in recent years from sales tax drops, tax base stagnation and a state-imposed property tax cap.
To County Manager John Sheppard, that boost — and the ongoing revenues the county stands to receive from gaming taxes — represents the only path to staying under its tax cap. Without it, there’s “no way we’d be compliant with the tax cap expectation,” he said.
The revenues generated by building del Lago in the 35,000-person county — and the economic development implications beyond the facility’s February opening — could provide a boost to a struggling rural area, Sheppard said.
Through May 30, the county had received $764,766 in ongoing gaming funds. Seneca’s 2017 general fund budget included $1.5 million in anticipated revenues that are planned to fund general operations. Sheppard says he’ll likely recommend budgeting the money for operations again in 2018, with little choice if he wants to stay under the tax cap.
“With (gaming revenues), that doesn’t eliminate all the other complications of governance,” Sheppard said. “We’re still watching every dollar.”
The New York Comptroller’s Office doesn’t have specific recommendations on how municipalities should spend their casino revenues, and they aren’t subject to special oversight, said spokesman Brian Butry.
However, becoming too reliant on non-recurring revenues could open a municipality to scrutiny, Butry said.
A 2013 comptroller’s office audit of the City of Niagara Falls highlights how funding general operations with casino revenues could backfire.
In 2009, a dispute between the Seneca Nation and the state resulted in the suspension of payments of a portion of gaming revenues to the state and city.
Niagara Falls officials expected the dispute to be settled quickly and began to use its fund balance to finance expenses previously covered by casino funds. Even as the dispute dragged on, the city continued budgeting for those revenues, leading to a fund balance deficit of about $5.2 million by the end of 2012, according to the report.
Lowering residents’ overall property tax burden is a more responsible use for the funds than new spending, said Ken Girardin of the Albany-based Empire Center for Public Policy.
“Every local government’s situation is different, but they all need to resist the urge to add new unrelated spending. For one thing, there’s no certainty about how much casino revenue can be counted even one year out,” Girardin said.
Many municipalities “have old road and water infrastructure that could present sudden costs down the line, so it makes more sense to place money in reserves than to spend it on amenities,” he added.
Schuyler, Wayne, Broome and Chemung counties are among those who’ve budgeted casino revenues for their general funds.
Broome County used an unbudgeted license fee payment of $3.7 million to cover budget shortfalls in 2016, said County Executive Jason Garnar. This year, the county’s budget includes $2.2 million in gaming revenues. Through May 30, the county had received $1.43 million.
Tioga County legislators will soon discuss where the $571,208 it’s received so far will go, said Martha Sauerbrey, chair of the county legislature. A $1 million license fee payment replenished a capital reserve account, and it’s possible the continued revenues would end up there, too.
“We might not get the $250,000. Right now, it doesn’t look good.” said Budget Director Steve Hoover. “If those funds don’t come in, we’re going to have a hole in our budget.”
So far, the county is slated to receive $297,384 from Tioga Downs and del Lago through May 30.
About 53 percent of residents, including much of the City of Elmira, falls west of Route 14, the dividing line between the Salamanca payments and the Tioga Downs and del Lago revenues.
“That hurts us because we have more than half our population included in a calculation with a more remote casino,” Hoover said. “It would have been a lot more beneficial to us if our entire population had been included.”