Casino news source: The Morning Call - http://www.mcall.com
Debate begins on spending Bethlehem casino fee
Two years early, city asks if 50% should be used to cut taxes.
By Matt Assad Of The Morning Call
Bethlehem won't even start collecting $8.7 million a year in tax revenue from the casino proposed for South Side until 2009, but already a fight is brewing over how to spend it.
While Mayor John Callahan is devising a plan to replenish city reserves, cushion the impact of gambling and stabilize taxes, City Council President Michael Schweder is drafting an ordinance to use casino money to reduce tax rates by more than 20 percent.
Add to that a steady stream of civic groups, nonprofit organizations and even city department heads who have begun lining up with their palms facing up, and Bethlehem is beginning to look like a lottery winner who is being hounded by bill collectors and telemarketers, even before the check has arrived.
''Believe me, the pigs are lining up at the trough, and I consider myself the neediest, most deserving pig of them all,'' said Alan Jennings, executive director of the Community Action Committee of the Lehigh Valley. ''We all want our piece of that money.''
Jennings may never advance from the back of this line because Callahan and Schweder have already begun to jostling at the front.
''I am drafting an ordinance that will require that 50 percent of all gambling host fees go toward reducing taxes,'' Schweder said. ''That was the reasoning behind allowing gambling into the state in the first place.''
Such a reduction would cut the real estate tax by about 23 percent. For the typical homeowner with property assessed at $62,000, that would reduce the tax from $864 a year to $665 a year.
The remaining 50 percent of the money would be used to handle the impact of hosting a casino and the 4 million tourists a year it is expected to attract. That could mean more police and firefighters, or improving roads.
Callahan says Schweder's approach may sound good on the surface, but is far too simplistic.
''I would hope that an ordinance like that never passes,'' Callahan said. ''I think this money should be used to reduce taxes, too, but let's get our financial house stabilized first.''
Schweder said he hopes to introduce his ordinance in the next two weeks.
As for Jennings and his plan to use $1 million a year for low-income housing development on the South Side? Well, he's probably in line behind everyone who owns a home, city finance officials and hundreds of city workers.
''There are a lot of people with dollar signs in their eyes right now,'' Callahan said. ''The requests are going to outpace the money, so we're going to have to be smart about setting our priorities.''
Here's a six-part plan on the items that Callahan would use the city's gambling host fees for, in order of priority:
A cushion for the impact of gambling. The city must prepare to host an estimated 4 million tourists a year at a 124-acre casino development that will add several new blocks of streets to the city grid. Callahan said that could require more police, more firefighters, more emergency medical personnel and more money to the public works, parks and property departments.
Schweder said he'd put 50 percent of the host fee into an escrow account to handle those impacts, but he said he'd prefer to wait for the casino to open to see what the impacts are, before he begins spending the money.
Callahan says waiting will leave the city unprepared, and that it should study the potential impacts in advance.
Filling city cash reserves. In a week when the city has to dip into escrow accounts just to make payroll, Callahan said it's more clear than ever that the city create a larger reserve fund. Despite a $58 million budget, the city carries just $500,000 in reserve. That number would be bumped to closer to $5 million.
Callahan argues that creating the reserve account will improve the city's bond rating, saving it millions of dollars in interest payments in the future, thus making it easier to reduce tax rates.
Schweder said Callahan should find some other way to fill those holes. He said no gambling money should be used for it.
Possible tax cuts. Some of the money would be used to keep taxes from increasing, and to provide property tax cuts. But how much tax relief would be determined by how much casino money is left to do it.
''I think it's important that everyone see some benefit from these dollars,'' Callahan said. ''This might be the best way to do that.''
Schweder's top priority is to use roughly $4.3 million in host fees for tax cuts.
Two new business improvement districts. The business districts north and south of the Lehigh River would get added services that could include everything from more police patrols to more street-cleaning to more money to streetscape improvements. It could even include a shuttle carrying people between the two downtowns. Callahan said he'd want businesses to contribute something, but the program would be heavily subsidized by gambling money.
The Steel stacks and more. Some of the annual money could be funneled into projects such as refurbishing Bethlehem Steel's old blast furnaces as historic sites, or running a city visitors center in front of the blast furnaces.
Everyone else. If there's money left over, it may enable the city to install its own grants program, giving civic groups like Jennings' CACLV a chance to compete for grants.
Callahan said he hopes City Council will be willing to work with him on a unified plan they can all agree on.
With Las Vegas Sands casino projected to open in the second half of 2008, and the state committed to quarterly payments to the host cities, Bethlehem can't expect any significant revenues until January 2009, said Department of Revenue spokesman Steve Kniley.
The host fee is scheduled to be $10 million for eligible host cities and about $6 million for the host county in the Lehigh Valley. But under a revenue-sharing plan that spreads the money across the Lehigh Valley, Bethlehem's yearly share is $8.7 million.
Allentown is due $3.3 million, Northampton County will get $1.3 million, Lehigh County is scheduled to get about $800,000 a year, and $1.5 million is to be spread around other municipalities in the Lehigh Valley.
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