La Center prepares for massive revenue shortfalls after casino opening

LA CENTER — With their new neighbors to the west, the Cowlitz Indian Tribe, only seven months away from opening their massive, $500 million ilani casino, officials in the small city of La Center are facing a revenue shortfall a long time in the making.


“We’ve been talking about this for a long time,” said La Center Mayor Greg Thornton. “I was well aware of what the issues were going to be when I became mayor … and it is going to be a challenge for La Center.”


Thornton, who became mayor in 2016, after the city’s longtime mayor, Jim Irish, decided against running for a fourth term, says the city is facing fiscal uncertainty with the opening of the 368,000-square-foot casino-resort.

The scheduled opening of the Cowlitz Indian Tribe’s new $500 million casino-resort in Spring 2017 is expected to have a significant impact on La Center, eroding the small city’s main revenue source -- gambling tax from La Center’s existing card rooms. Photo by Mike Schultz
The scheduled opening of the Cowlitz Indian Tribe’s new $500 million casino-resort in Spring 2017 is expected to have a significant impact on La Center, eroding the small city’s main revenue source — gambling tax from La Center’s existing card rooms. Photo by Mike Schultz

For many years, the city of La Center has relied on revenues from the private card rooms that operate in La Center’s downtown core. In 2016, the majority of the city’s $6,050,988 revenues came from two sources – the $2,710,000 in gambling taxes collected from the city’s three card  rooms and the $1,211,235 from charges for goods and services related to sewer operations. The remainder of the city’s revenues come from property taxes ($409,000), sales taxes ($220,000), intergovernmental sources ($201,289) and other sources such as licenses and permits ($27,710) and fines and forfeitures ($28,000).


“Right now, 75 percent  of the our revenues come from the card rooms,” Thornton says.


When the Cowlitz Tribe’s ilani casino opens in April of 2017, the city expects to see a sharp decrease in card room revenues. Thornton says it’s very difficult to project just how much the private card rooms might be affected by the casino, which will boast a 100,000-square-foot gambling floor with 2,500 slot machines, 75 table games and a high-stakes gaming room in addition to its planned dining/retail space with 15 restaurants, bars and retail stores.


“We know we will have decreased revenues from the card rooms, but it’s difficult to project what that’s ultimately going to be,” Thornton says. “That’s because it’s very difficult to find another city where so much of the city’s revenue is dependent on like the card rooms.”


Although there are no hard numbers, city leaders are preparing for a 50 percent loss in card room revenues during 2017. Thornton says the first quarter shouldn’t take too big of a hit, but that once the ilani casino opens in April — and all indications are that the Cowlitz Tribe is on track with its casino-construction targets — the three private card rooms in La Center will lose a significant share of the area’s gambling enthusiasts and the city will lose a significant share of its revenues.


The issue is something that city and tribal leaders have been talking about since the Cowlitz first brought up the idea of building a casino near La Center more than a decade ago. In 2004 and 2005, the tribe approached the city with a plan to pay up to $3 million a year in lost card room revenues if the city would agree to recognize the tribe and not fight their development. City councilors in La Center refused to accept that agreement. Finally, the tribe stopped offering. Last March, the city and tribe signed into an intergovernmental agreement that did not promise to make up for the card room revenue losses, but did include a plan for the Cowlitz Tribe to fund the city’s sewer expansion to its critical, undeveloped commercial and light-industrial land near the I-5 junction.


When he moved from the city council into the mayor’s seat in 2016, Thornton promised to consider other revenue sources for the city, to push for economic development at the city’s Interstate 5 junction, which is located very near the Cowlitz Indian Tribe’s reservation and will be well-positioned to capture some of the tourist traffic headed in and out of the ilani casino, and to have greater transparency when it came to the city’s budget process and major operations.


True to his word, Thornton has established a budget steering committee, made up of city councilors, city staff and La Center citizens, is working with city planners to get an economic strategy performed on the I-5 junction area to determine the land’s best economic uses and has been hosting informal town halls once a month to discuss city issues with the public.


A budget meeting planned for Thu., Sept. 29 was to be the third budget meeting held since summertime and the city has planned two public hearings to discuss the potential revenue shortfall in October.


Although still very preliminary, the city is considering a variety of new revenue sources, including new excise taxes on utilities and using city reserves. Due to limitations on the amount of taxes that can be levied on utilities and most city leaders’ unwillingness to go from being the only city in Clark County that has no excise taxes on utilities to having high excise taxes, that particular revenue source would probably bring in less than $300,000 — a significant amount of money, but not nearly enough to make up for what could be a revenue shortfall of more than $1.5 million. The city could also opt to raise property taxes, but is limited by state law to a 1-percent increase per year.


Without the card room revenues that it depends on to pay three-fourths of its budget, the city may have to consider cutting services, but Thornton said that is a tough subject, particularly in a city the size of La Center, which has fewer than 30 city employees.


“It’s a very sensitive subject,” Thornton said of cutting city staff positions and city services. “Right now, 80 percent of (the city’s expenditures) is for salaries and benefits, so we can’t help but start to think about how we are going to look at the level of service we provide.”


Thornton said his philosophy is that public safety is a priority for La Center, so he would like to see the city “try its best to not have an impact” on police funding. However, he said, it is still too preliminary to talk about which, if any, city services might be impacted by the revenue shortfall.


“It’s apparent that we’ll probably have some significant decreases in our revenue streams due to the opening of the casino at the junction,” Thornton told the public at a La Center City Council meeting held Sept. 28. “We’re thoroughly looking at it and considering all of our options.”


For more information about the La Center City Council’s workshops and meeting, click here. To read about the Cowlitz Indian Tribe’s new ilani casino-resort, click here.


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