Casino tax hike could hurt charities

Since the roulette wheels started spinning at the Grand Victoria Casino nearly 10 years ago, some of the biggest winners have been charitable causes all over the Fox Valley.

Shares of the riverboat's many millions of dollars in annual profits have gone to help battered women, children with disabilities, at-risk kids, low-income families and others.

But the considerable influx of casino cash to not-for-profit charities and social service agencies could dry up, officials say. It's mainly because of the state's recent move to raise its tax on the casino from 50 percent to 70 percent.

Simply put, with the state taking more money, there is less to split up among the casino and other beneficiaries, including the city of Elgin, Kane County and the Grand Victoria's philanthropic foundation.

"It's perhaps the worst possible time for us to lose that money," said Erik Anderson, director of the Boys and Girls Club of Elgin, which this year received $160,000 in riverboat grants from the city and the casino foundation. "I'm operating at bare bones right now - I can't cut any more."

The city of Elgin and Kane County each take in sizeable portions of the Grand Victoria's annual winnings from its millions of customers. In 2002, the county took in about $9.7 million from the casino, while the city collected about $23 million.

Kane County has used its share to run its groundbreaking drug court, its heralded Farmland Preservation Program and its child advocacy center. Likewise, Elgin was able to build the state's biggest public recreation center, completely overhaul its once unsightly downtown riverfront and add countless amenities such as resurfaced streets, new swimming pools and a stately golf course.

Both the county and city also have given large grants to not-for-profit agencies.

Elgin Mayor Ed Schock said he's not certain exactly how bad the consequences brought by the new casino tax will be, but he expects some negative effects, which could mean the city will be forced to halt some pending projects and cut back on the number of grants it gives to not-for-profits.

"There's a lot of impact on everyone potentially," Schock said, predicting the Grand Victoria will scale down its operations and staffing to lower its revenues and put it in a less-expensive tax bracket.

"That reduces our revenues," Schock said. "If our revenues go down ... projects will be delayed; everything will be moved back a couple years."

Elgin's 2003 budget for riverboat funds includes more than 100 projects and initiatives of its own and those of outside agencies.

Included are $200,000 for neighborhood park improvements, $1.8 million for a sixth fire station on the near west side and $3 million for street reconstruction. The city also pledged to make contributions to numerous community events and organizations such as the Public Action to Deliver Shelter, the Elgin Symphony Orchestra, the Four Bridges of Elgin bike race and the Boys and Girls Club.

Already projecting beyond 2003 and through 2007, Elgin had cut the amount of money budgeted in the riverboat funds by between $13 million and $15 million annually because of possible competition from a 10th casino in Illinois.

City projects' budgets were scaled back, but not-for-profits would be the hardest hit if Elgin's flow of riverboat money slumps more than it already has simply because of a slow economy.

Money for the Boys and Girls Club could drop from $150,000 this year to $103,500 in 2007, under city projections. Money for the Elgin Recreation Center and its anti-gang programs could slip from $260,000 this year to $138,000 in 2007.

Effects of the tax increase only would make things worse.

"If our riverboat revenues go down, we'll reduce the money we give to non-profits," Schock said. "We can't be cutting city projects and keep (the not-for-profit groups) at full funding. That wouldn't make any sense."

Anderson at the Boys and Girls Club said he hopes the city council will review community groups individually to decide which get their funding cut rather than make across-the-board reductions.

"I respect that they need to make some tough choices ... but let's do this objectively," Anderson said. "If the city cuts all $150,000, I can't operate. If the city chose to make a significant cut, I'm still extremely hamstrung."

Kane County predicted its share of casino profits to drop by $2 million or $3 million next year.

It took in $9.7 million in 2002, down from $12 million the year before. Another drop likely means continuing the moratorium that county leaders placed on the riverboat grants given to outside agencies like towns or historical societies, Kane County Board Chairman Michael McCoy said.

It also means a slowdown in funding for the Farmland Preservation Program, which allows the county to pay farmers about $5,000 an acre for the development rights to their land.

"Looking at the forecast for the next two years, it's going to be hard to justify putting $2 million a year into farmland protection," McCoy said.

Still, the outside grants and farmland preservation may be the only fiscal victims. The county also spends about $5 million in riverboat funds to operate other programs and departments, including drug court, the county's storm water management program, the child advocacy center, and the KidCare low-income health insurance program.

None of those appears to be in jeopardy, McCoy said.

The Grand Victoria Foundation, which gets about 12.5 percent of the casino's money for charitable organizations, likely won't suffer too much if revenues are down. In recent years, it has set aside more than $10 million in a trust fund for future use.

Nancy Fishman, director of the foundation, did not immediately return calls seeking comment for this story.

The Grand Victoria is the most profitable casino in Illinois. Since opening in 1994, its total revenue after paying winners is close to $2.5 billion, according to the Illinois Gaming Board's 2002 Annual Report.