OPINION | EDITORIAL: Money in, money out with casino revenue
Sunday 3rd January 2021
A story last week in The Commercial continued to bring home the wisdom of the city's decision, and by that we mean Mayor Shirley Washington's decision, to put off giving across-the-board raises to city workers.
The reason was because those raises were being funded by tax revenue from the Saracen Casino Resort. The story went into some detail about how much in taxes the casino pays. The long and short of it is those taxes can vary greatly. On occasion, the amount paid by the casino, including the Annex, has been as high as almost $800,000 for a single month. But in another month, the figure was as low as $119,000.
It should be noted that those numbers are not what gets paid to the city of Pine Bluff. There is a formula, with some going to the city and the rest going to the county, the state and into a fund to support live horse racing purses. But almost 20% of the monthly taxes paid by the casino does go to the city, and, well, 20% of the lower figure is considerably less than 20% of the higher one.
We can't think of one part of any of this that doesn't have to do with the covid-19 pandemic. Carlton Saffa, a casino executive, said he believes the pandemic has cost the casino 35% in revenue. It was reassuring to hear that the business is still "revenue positive," but the covid numbers in the state do not paint anything but a dreadful picture, at least for now.
On the day before Christmas, in Arkansas, there was a startling number of new covid cases reported: 3,204. That was a new record, and it topped another record of 3,184 new cases set just two days before. Now, on Friday, the number of new cases has soared to 4,304 new cases, beating the Christmas eve figure by more than a thousand. These numbers are apparently our new normal, but we recall when 800 new cases seemed like a lot.
We are advising nothing new here, but if ever there was a time to limit social interaction, it would be now. And in that environment, does the casino's diminishment of revenue go above 35%? The answer to that question is, of course, unknown, but one can quickly see the folly in a city trying to pay for something -- in this case, raises -- with a tax target that has already bounced around quite a bit and could zigzag a lot more.
So, good job, Mayor Washington, in behaving in a fiscally prudent manner. There has already been some grumbling about the postponement of the raises, but if the city got itself into a fiscal jam, there would be deafening outcry of discontent over a city being run so poorly.
Speaking of money in, money out, we make one other recommendation. This would be the perfect time to hoard the casino tax dollars and increase the city's reserves. When the story came out that the city's finances were so dependent on the casino's tax proceeds, it caused concern. Wouldn't it be better if that tax windfall was used first to create a bomb-proof reserve before committing the money to an ongoing expense? Now, with the postponement of the raises, the city has the opportunity to do that.