What happens when the well runs dry? Or, in the case of counties, cities and school districts in Western New York, what happens when the casino money runs dry? That’s what has happened after the Seneca Nation of Indians halted revenue-sharing payments from its three casinos.
The solution seems simple enough: Negotiate a settlement. The state and Senecas need to schedule a meeting, keep the appointment and come to a resolution.
Of course, it is not simple. The sides have not met and, as of Monday, the stakes went higher as Gov. Andrew M. Cuomo threatened to permit a new non-Indian gambling hall near the Seneca Niagara Casino.
The conflict has a lot of people on edge as municipalities find their budgets in various states of distress. Communities that have relied on casino money for the past 14 years have been left in limbo. Some are better off than others. A few, especially Niagara Falls, relied too heavily on the money and will have to figure out a way to make up for the absence of millions of dollars a year.
The shock waves hit four months ago when the Senecas first announced they were ending the revenue-sharing payments required under the compact that allowed the Senecas to operate three casinos in Western New York. The payments have added up to more than $110 million a year.
The Senecas have decided that the compact required payments only for the pact’s first 14 years, a period that has ended. Because the agreement says nothing specific about the years through 2023, the Senecas have decided it means they owe nothing.
The compact was renegotiated in 2013 to resolve an earlier conflict over competing casinos, but the reworked deal still failed to specify the tribe’s obligation after 2017.
The issue involves the Senecas’ three casinos – in Niagara Falls, Buffalo and Salamanca – and, critically, the governments that have relied on payments amounting to 25 percent of slot machine revenues. Those governments are hurting, especially the city of Niagara Falls, where casino income amounts to 15 percent of its operating revenue. The city’s credit rating was just downgraded by Standard & Poor’s because of the revenue loss.
Niagara Falls officials have been overdependent on casino money for balancing the budget. The city is hardly alone in financial difficulties. It had been receiving $16.8 million a year, and shared some of that with city schools, the Niagara Falls Memorial Medical Center, Destination Niagara USA, the Niagara Frontier Transportation Authority and the state’s Niagara USA Development Corp.
And although Niagara Falls may be hit hardest, Buffalo officials have to contend with a loss of $7 million, or about 1.4 percent of the city’s budget.
Erie County got a reprieve of sorts with an unexpected rise in sales tax revenues making up for the lost casino money – for this year. Salamanca officials wisely saved two years’ worth of its revenue for this type of emergency.
If the payments don’t resume soon, residents will begin feeling drastic impacts as cities try to close budget gaps.
Officials at the Niagara Falls hospital are already considering a delay in the third phase of a major renovation of its parking garage complex. The hospital has used its $750,000 in annual casino revenue to build two new behavioral health offices and a renal dialysis center while expanding countywide programs.
The ripple effects could turn into a wave – a tsunami even – if Cuomo and Seneca President Todd Gates don’t stop the dramatics and agree to meet soon. The governor in April told Gates he wanted to meet, but no meeting took place. One was scheduled a few weeks ago, but Cuomo canceled it. The governor’s office said both sides have been unable to reach an agreeable date, which says that neither side is much interested in getting together.
Threatening to build a competing casino in Niagara Falls is one way to get the attention of the Senecas, although the Senecas would surely claim it to be a violation of the tribe’s zone of exclusivity. Regardless, it’s a solution that would diminish both sides by diluting the revenues they could otherwise reap. They should reschedule the meeting. Now.