The city of Elgin has to deal with the consequences of a shortfall in projected revenue from the Grand Victoria Casino.
Although casino revenues have been declining steadily for years, this is the first time in recent memory that revenue projections -- and therefore budgeting -- are off, City Manager Sean Stegall said.
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Riverboat fund proceeds through May totaled $4.2 million, or about $834,000 below budget, Assistant City Manager Rick Kozal said. That loss was partially offset by $260,000 in savings from buying a demo model ladder truck for the fire department rather than a new one, and a street improvement project that came in under budget, Kozal said.
Councilman John Steffen pointed out that if the trend continues, the shortfall will total $1.8 million by the end of the year.
Mayor David Kaptain said he met with casino general manager Jim Thomason. "They anticipate this is going to get worse," he said.
Riverboat funds are used to supplement the city's general fund, purchase equipment, and fund one-time projects such as street resurfacing and storm and sanitary sewer separation.
They are also used to allocate $200,000 in grants to local nonprofit and social service agencies, and local arts grants totaling $50,000.
"Come 2015, it may be time to consider whether these types of subsidies can continue, given the new order of revenue streams of the Riverboat," Kozal said.
The plan is for council members to meet with Stegall in pairs to give their input on how they want to deal with the declining riverboat revenues.
Possible areas of savings are $940,000 set aside for property acquisition and environmental cleanup. The city has been looking for grant money to supplement the latter, Kozal said.
Councilman John Prigge pointed out those funds are what city staff members said could be used to fund some of the needed repairs on the site of the former Fox River Country Day School, which is empty and unused.
A big-ticket item in the Riverfront budget is a new $400,000 security and camera system for the jail inside the police department.
The department has hired a consultant for the project, an expense approved by the city council last year, police Deputy Chief Bill Wolf said.
"Some of (the system) is failing, and it goes down on a regular basis," he said.
Another project within the riverboat fund is a warning siren system upgrade, which could be funded by local Emergency Telephone System Board funds, Kozal said.
It will be difficult to cut enough expenses without touching some planned street- and infrastructure-related projects, Stegall said.
"This is going to be a difficult exercise for the city," he said.
Council members could also decide to use general fund reserves to pay for some of the projects budgeted in the riverboat fund.
The city bases its projection on estimates from the casino, which have been "eerily accurate" over the years, Stegall said. This year, however, was an exception, he said.
The city gets 5 percent of the casino's gambling revenues and $1 admission tax per patron, along with proceeds from leasing land to the casino. That lease is $1.7 million per year, but it is being renegotiated with a target of $1 million per year, Kozal said.
The casino wants to infuse that extra money into improvements to make it more competitive in the statewide declining casino market, he said.
Shortfall: 'This is going to be a difficult exercise for the city'