City has a plan for casino's cash

Managing and spending of money generated by the Isle Casino Cape Girardeau for the city this fiscal year is being treated with an originally intended approach. Yet that approach, a policy created in 2012, is being tried by city leaders for the first time.

"I think it's working fine; it just takes time for it actually to play out," said Councilman John Voss, who helped create the flexible spending policy for casino money. The city's first full fiscal year of collecting casino-generated revenue is ongoing; it began in July and ends June 30.

At Tuesday's meeting, the city council is expected to finalize a plan for splitting the anticipated $3 million into several funds that will allow the city to follow the policy.

The policy's purpose is to guide the council through spending the money in areas its planners felt it was most needed. Percentages will go toward these areas:

* Capital improvements;

* An "innovation fund" for one-time purchases such as technology and equipment upgrades that could bring future savings;

* A "legacy fund" that will be saved to draw interest and later bring new revenue;

* A "riverfront development fund" to bring improvements to downtown;

* An "adjacent community fund" that will provide money for other communities to use or to go toward regional projects.

In the 2013 fiscal year, which ran from July 2012 to June 2013, the city collected about $2.2 million in casino revenue during the its first eight months of operation. The casino opened Oct. 30, 2012.

Revenue that goes to the city comes from 10 percent of the total state taxes paid by the casino and half of admission fees for patrons.

Though the policy had been approved, because the amount from the casino was less because it was gathered during a shorter-than-normal time period, the council determined it would stray from the policy during the first round of spending.

Two sets of projects totaling $1.6 million that included a new dog park, downtown parking lot overlays, lighting improvements, a space-design study for a new police station and others were chosen and paid for from the first eight months of revenue. The council based the amounts planned to be spent on the casino's monthly revenue reports.

But planning to spend and the spending itself will look different this year in several ways, thanks to the policy.

"We wanted the community to see the impact of having the casino, as we were still trying to work through the process of how to handle that money every year going forward," Voss said.

Spending plans

First, in the 2013 fiscal year, the casino revenue wasn't split into the categorical funds. This year, it will be.

An ordinance given first-round approval by the council Jan. 6 intends to allocate 3 percent of casino-generated revenue to the adjacent community fund, 10 percent to the legacy fund, 40 percent to the capital improvement fund and 20 percent to the innovation fund.

The remaining money will remain in an account that can be allocated with flexibility approved by the council.

Those percentages are the minimum in a range of percentages for each fund set out in the policy and make up 73 percent of the total revenue.

At the end of the year, the council intends to decide how to spend or save, or combine spending and saving, the remaining 27 percent.

Planning for spending the money in each fund also will be more closely related and included in the city's normal yearly budgeting processes, said city manager Scott Meyer. Last year the council in the early spring vetted the project lists in a special casino money funding process.

"What will begin to happen in the upcoming years is as the casino funding becomes available in those categories, then we'll look during the [capital improvements plan] and budget processes for guidance from the council on things they wish to fund through that regular process," Meyer said.

City staff and officials present, consider and approve capital improvement plans in February. Other annual budget presentations and approvals are made during the council's annual retreat in April and in the weeks following before the close of the fiscal year June 30.

Actual spending

Having the money in hand first is a spending rule the council wants to see followed this year. Last year the council based the spending amounts planned on projects on the monthly reports of casino-generated revenue. A desire for that change has been voiced by the council.

"On this one, we all agree that the necessity is allocating it only after it is collected," Councilman Mark Lanzotti said at the Jan. 6 meeting.

Voss said that strategy closely matches how the city already handles money flowing into the city's other trust funds.

Meyer said approval by the council to spend money from casino operations before it actually arrived in the city's accounts in the last fiscal year has never been part of the long-term intentions of city leaders. But there were special circumstances the council determined that required doing that.

One was approving $1.2 million for a utilities system on land intended to be developed by the city into a business park, which Meyer said the council felt was needed to make the property more marketable to developers.

Another was spending $150,000 to plan a $1.15 million lighting improvement project for the downtown area.

Money for both those spend-ahead plans will come from this fiscal year's revenue.

Opposite of spending ahead, there also has been a consensus among the council that saving some of the casino revenue each year is desirable.

Voss said he hopes "future city councils will see there is a lot of latitude in what happens with those funds. You don't have to spend it all at one time," he said.

eragan@semissourian.com

388-3627

Pertinent address:

401 Independence St., Cape Girardeau, MO