Budget plan also asks for union concessions, pension relief
Darren A. Nichols and Leonard N. Fleming / The Detroit
Detroit — Mayor Dave Bing will propose boosting taxes on Detroit's casinos to raise about $20 million in a budget presentation to the City Council today.
The plan is included in a budget that also seeks more concessions from unions and a freeze in payments to two pension funds to help reduce spending by nearly $200 million, officials said.
Advertisement
Both would be controversial, as would increasing the casino tax by up to 3 percentage points. State lawmakers would have to sign off on the proposal, but city officials say the casinos could give more.
Gross revenues at Detroit's three casinos are taxed at 19 percent — 8.1 percent for the state and 10.9 percent for Detroit — compared to gaming taxes of 33 percent in Ohio and 15-40 percent in Indiana.
"We're talking about generating $200 million that we need in savings or new revenue. Obviously that's a new revenue," spokesman Dan Lijana said.
"Our rate is not competitive with other states in the area and the casinos have withstood the economic crisis far better than most of the businesses. That's a pretty significant piece."
Bing is set to deliver his second budget to the council at 10 a.m. It comes at a critical time. Bing inherited a $300 million deficit when he became mayor in 2009, cut it to $85 million last year in part by borrowing $250 million and it's crept back up to $155 million.
Bing and others in the city warn that, without drastic changes, Gov. Rick Snyder could appoint an emergency manager with sweeping powers to take over the city's finances. Council President Charles Pugh said it's time to "be serious."
"Do you want Mayor Bing and the council to run the city or do you want somebody else to run it? That's real," Pugh said.
"We want the people who work in the city to understand that we're up against a wall and we have to make some tough decisions about our pensions, benefits, contractors (and) the city services we deliver."
Bing's proposals could spark several fights — from unions who object to further concessions, council members who want deep cuts and casino operators who say they've been tapped enough.
State law required
Increasing taxes on casinos would require a state law that's already been changed recently. Taxes went from 18 percent in 2004 to 24 percent, before decreasing again starting in 2007 when permanent casinos opened in Detroit.
Lijana said Bing staffers have discussed the proposed increase, which would be for one year, with Snyder. The governor's staff did not return phone calls seeking comment.
Councilwoman Saunteel Jenkins said that proposal isn't realistic because it requires lawmakers to sign on and lacks specifics. City officials wouldn't say exactly how much they want to increase the tax, which last year added $163 million to the city budget.
The facilities also paid the city $17 million in fees.
"I don't think our budget should be based on revenues that we can't get unless we get legislation passed," Jenkins said. "I know that the casinos are definitely an easy target but I don't know that we should be targeting any one industry to help fill budget gaps. Our revenue projections need to be realistic."
Council President Pro Tem Gary Brown said he wouldn't agree to the tax unless it's tied to a plan to eliminate the deficit.
The proposal comes as profits at Detroit casinos have steadied or increased in some cases. Revenues increased 6.3 percent to $582 million last year at MGM Detroit; remained flat at $446 million at MotorCity Casino and increased 1 percent to $350 million at Greektown Casino Hotel.
Greektown emerged from Chapter 11 bankruptcy last year, and gaming consultant Jake Miklojcik called Bing's proposal "unfair." "These (casinos) are not profitable places right now when you talk about their debt," Miklojcik said.
Bing's agenda aggressive
Bing, who cut $101 million from the $3.1 billion general fund budget last year, will offer a budget that will fix the city's longstanding structural problems, his staff said.
"We are going to lay out an aggressive fiscal agenda to address structural issues like pension and medical costs while generating new sources of revenue going forward," spokeswoman Karen Dumas said. "We cannot cut our way out of this fiscal crisis."
Bing wants the city's 48 unions to agree to contract changes to make workers and retirees pay 20 percent of health care costs. Most contracts expire in 2012, and unions — that have already agreed to 10 percent wage cuts — aren't eager to make more concessions.
"What we have seen already is (Bing) always wants to take away wages and benefits from the people who make the least," said Catherine Phillips, lead negotiator for the city's largest union, the American Federation of State, County and Municipal Employees Council 25.
"There's no rush to open up the contracts to take additional cuts," she said.
Bing also wants to save $7 million by collecting fees from insurance companies for transporting ambulance patients; save another $6 million by cutting consulting contracts by 10 percent and generate $20 million by doing a better job collecting property and income taxes.
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
(313) 222-2073
Subscribe to Detroit News home delivery and receive a SPECIAL INTRODUCTORY OFFER.
| < Prev | Next > |
|---|
Copyright © 2024 ToCasino.net Online Casino. All Rights Reserved. Designed by