Since July 1, towns throughout Illinois have been feeling the effects of the state’s budget standoff. They’re resorting to using reserve funds, since they’re not receiving motor fuel taxes and emergency telephone system money. Casino host communities like Elgin, Aurora and Des Plaines are scrambling even more to pay for road projects, economic development and social services without the benefit of gambling tax revenue. Elgin City Manager Sean Stegall said, “At some point we thought maybe governance, common sense and stewardship of the state of Illinois would have taken over by now. Apparently not.” Those cities and others are trying to finalize 2016 fiscal budgets, beginning January 1, without digging deeper into reserves.
Republican Governor Bruce Rauner and the Democrat-controlled legislature have not been able to agree on a budget for the fiscal year that began July 1. Rauner wants to lawmakers to pass pro-business changes and Democratic lawmakers want Rauner to back new taxes. State laws and consent decrees are resulting in spending of state funds at unsustainable rates.
Aurora Director of Finance Dorothy Wisniewski said the city may have to reduce storm water, street repair and other capital project expenses by $8 million next year without its disbursement of Rivers Casino tax revenue. “It’s very difficult for the city. We do count on gaming funds to fund capital infrastructure projects, but the city may need to delay those projects, or fund them with other sources or we may end up bonding out,” Wisniewski said.
Casino revenue is projected to exceed $24 million this year, of which Des Plaines pays the first $10 million to the state and 40 percent to 10 South suburban communities. The city received $12.4 million through July; the bottom line is its current share is $1.4 million out of more than $8 million projected for 2015, Wisniewski said. As a result, she added, the city may delay some projects in 2016 to make sure it can fund critical projects in 2017, such as building infrastructure to buy water from the Northwest Water Commission.
In Aurora, Chief Management Officer Carie Anne Ergo said Hollywood Casino tax revenue provides more than $1.7 million annually for education, social services and cultural grants and programs; funds economic development initiatives such as “Invest Aurora;” and has helped lower property taxes. “We’re in the process now of finalizing our budget, and it’s been extremely difficult. The reality is, we’re looking into next year and we wouldn’t be able to be in a position to expend those funds if the state is not continuing to pay for them,” Ergo said.
This year casino revenues were estimated at $7.5 million but since July the state has withheld $1.7 million so far, which will increase to $3.5 million by the end of the year, Ergo said. The proposed 2016 budget includes programs that typically are funded by casino money. However, Ergo said, if the funds aren’t available by January 1 the city would have to try to negotiate lower contract payments, while economic development projects would remain a priority to help boost tax revenues.
Since July the state has withheld $2.5 million of the estimated $10.1 Grand Victoria Casino tax revenues expected by Elgin, and that withholding could increase to $5 million by the end of the year said Chief Financial Officer Debra Nawrocki. Stegall noted $4 million in street projects budgeted for 2016 will have to wait. “In comparison to every other budget that I have proposed or have been a part of in the city of Elgin, this will be vastly different due to the uncertainty,” Stegall said.
Meanwhile, since October 14, state officials announced Illinois would not pay lottery prizes of $600 or more, so players increasingly are purchasing lottery tickets in Missouri, Indiana, Kentucky and Iowa. Retailers in towns bordering Illinois said the rise in sales started in August, when state officials announced there was no authority to write checks for $25,000-plus payouts. Now business is even better since Illinois lowered the payout limit.
For example, Missouri Lottery ticket sales in the St. Louis area rose 3.8 percent from June to October 17, and statewide sales jumped 3 percent. Iowa Lottery officials said compared to last year, recent sales in five counties bordering Illinois are ahead of the overall 3.66 percent increase statewide. Indiana Lottery officials said northwestern Indiana counties near Illinois also posted an increase.
The Lottery’s problems resulting from the state budget situation lave led to a group of prize winners filing a federal lawsuit seeking payment plus interest. Lottery management also is in the midst of a shake-up after the state terminated its contract with its private company, Northstar Lottery Group, due to management issues and a drop in proceeds last year–the first time since 2009.
