Upstate N.Y. Local Governments Get Infusion of Casino Money

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The state is doling out $30.2 million in license fees from three new casino projects to counties and municipalities.

Local governments in upstate New York haven’t hit the jackpot, but some are cashing in as the state distributes license fee revenues from three new casino projects now under construction.

New York state is dividing $30.2 million of the license fee revenues between 22 counties, and three municipalities. Individual payments range from $117,546 up to about $2.5 million, according to figures released last week by Gov. Andrew Cuomo’s office.

The money stands to offer a welcome, albeit limited, financial boost in places where it will be received. Some of the recipient jurisdictions are smaller-sized, and the license fee payments are significant compared to their annual budgets and tax revenue streams.

Local officials in two of the localities, contacted this week, said the license fee payments are helpful from a budgetary standpoint. But they are more eager to see the long term fiscal benefits the casino projects might provide—like revenues derived from taxes on gambling, and increased property tax collections from newly constructed gaming and resort facilities.

Four casino projects are moving forward under relaxed gambling laws New York voters backed in 2013. One of them, in Tioga County, is still awaiting final approval for its license. Five Indian casinos and nine video lottery parlors already operate in the state. The new projects come as the gambling market in the northeast U.S. is seen by some as increasingly crowded, with casinos in New Jersey, Pennsylvania, and Connecticut, among other states.

Cuomo, a Democrat, has touted the state’s expansion of casino gambling as a potential engine for economic growth. "These destination resorts will help drive more tourism and economic development dollars upstate and, with these payments, local governments are already seeing the benefits of these projects," he said in a statement last week.

The del Lago Resort & Casino is slated to open in early 2017 in the town of Tyre, within Seneca County. With a population around 35,000, Seneca County is sandwiched between two of New York’s Finger Lakes, west of Syracuse, along the New York State Thruway.

In recent weeks, the county received a $2.5 million casino license fee payment from the state. Annual property tax collections there total about $10 million, according to county manager John Sheppard. “There's a 25 percent shot in the arm relative to our annual levy,” he said.

For 2016, the county’s budget includes about $71 million in total appropriations. The casino license fee money wasn’t budgeted for this fiscal year and it’s not yet clear how it will be used.

For now, the money is squirreled away in the county’s undesignated fund balance, which functions like a savings account. It could remain there, providing a financial cushion to help cover expenses in years when revenues fall short of expectations, Sheppard said.

Or county legislators could choose to use it for a special project, he said, such as the replacement of a local mental health facility.

The town of Thompson, about 70 miles northwest of New York City, is where the Montreign Resort Casino is now under construction. Montreign is expected to open in spring of 2018, according to the governor’s office.

William Rieber, Jr., the supervisor in Thompson, said Monday the town had not yet received the license fee payment. “I understand the check has been cut,” he said. “But I don't have it."

The town is slated to receive $2,550,000.

That’s equivalent to about 19 percent of Thompson’s 2016 budget, which was around $13.2 million, including the local water and sewer districts, according to Rieber. He was unsure what the money might go toward, and what restrictions there would be on its use.

“I don't have any plans,” he said. “Because I don't know where we can legally spend it.”

Channeling some of the money toward park and recreation upgrades was one possibility, Rieber mentioned. He also pointed out that some of the town’s buildings needed work. As it started to rain on Monday, he said he was waiting for the roof on the Town Hall to start leaking.

“It's not bad, but it'll get worse if you don't fix it,” he said of the roof. “Typical of most towns, the economy we've gone through over the last 10 years, there's been a lot of deferred maintenance and postponement of expenditures.”

In a brief phone interview on Tuesday, Schenectady Mayor Gary McCarthy said the city had received its $2.5 million in casino license fee revenues last week. The money, he said, had been deposited in the city’s general fund and will be factored into the budget going forward.

"Our focus has been on property tax reduction,” McCarthy said, referring to how casino-related revenues would be directed.

Located about 15 miles northwest of Albany, Schenectady is the planned site of the $330 million Rivers Casino & Resort, scheduled to open in 2017. It is being built along the Mohawk River, on the former industrial site of the American Locomotive Co., or ALCO.

Rieber said the town of Thompson anticipates that revenues stemming from the Montreign facility will exceed $2.5 million annually in coming years.

While that amount of money could help bulk up the town’s budget, there’s a caveat. “We're going to be pushed for tremendous demand on infrastructure and services,” Rieber said.

He also noted that it could be three years or more before the town starts seeing casino-related revenues on a regular basis. That’s after factoring in the time needed for construction to be completed, and for the state to collect tax dollars and distribute them to localities.

“In the meantime, I've got to staff my building department, which is just over their head with the amount of construction going on here,” Rieber said. He estimated salary and benefits for an additional building inspector would cost about $80,000 per year.

"I can't pay for that on promises,” he added. “I have to write a check."

New York’s framework for taxing its new casinos involves a 37 to 45 percent rate on slot machine revenue, which varies based on the casino’s location. For table games the rate is 10 percent. Of the total tax revenue, 10 percent gets split equally between the county and the municipality where each casino is located. Another 10 percent goes to surrounding counties. The remaining 80 percent is set to be used statewide to fund schools and property tax relief.

Cuomo’s office said license fees generated $120.8 million for public schools.

Analysts at Moody’s Investors Service this week called the one-time infusion of casino license fees a credit positive for communities that received the funds.

But the analysts noted that state caps on property tax increases and sluggish sales tax growth have constrained local government operations in upstate New York.

The del Lago project, in Seneca County, involves about $440 million in new construction.

Assume that amount is about equivalent to the assessed value of the finished casino and resort, Sheppard said, and the county’s overall assessed property value, on which it can levy property taxes, would go up 20 percent.

He’s looking toward other revenues that are on the horizon as well.

“The $2.5 million for the gaming administration fee, yeah, very nice,” Sheppard said.

An estimated $3 million for gaming revenue annually: “Even better.” He then went on to say that even that money “could quite possibly pale in comparison” to growth in sales tax receipts, occupancy tax receipts, and fees for licensing services.

The extent of the gains for the county, he said, is a matter of how much “the revenue outpaces the expense of enhanced services.” But Sheppard added: "We're going to be in good shape.”

Bill Lucia is a Reporter for Government Executive’s Route Fifty and is based in Washington, D.C.

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