Tuesday, May 22, 2007

Traffic for the Casino and the City Budget

If not a traffic jam than it is a certainly congestion for coordinating stakeholder interests for the North Shore casino, and Ravenstahl wants to get it done quickly. In an earlier post, I cited something Sala Udin said back in 2000 regarding the lack of political will among city officials to follow the city's guidelines regarding contracting with minority and women owned businesses. He said, "There is no really strong political will for [the Sports & Exhibition Authority] to be strident in their enforcement of the guidelines because the goal is to get these projects moving". Following this pattern of city officials, Ravenstahl is prioritizing "moving the casino construction fahrd" because it plays a serious role in his loose city budget projections.

Back in March, Chris Briem pointed out some fallacies in the mayor's budget. He notes:

Why would the ICA be so concerned if things were looking up for city finances? One reason is that the city budget projections count on revenue from the casino coming in next year. I'd have to go check, but I bet the budget counts on some casino revenue this year. You really need to look carefully at the previous year's finances, which are said to have ended with $25 million in the bank. Superficially you may think that going from a $25 year-end balance in 2005 to $38 mil at the end of 2006 is a good sign. You have to dig just a tad deeper than that. Just consider that in 2006 the city:
  • Borrowed $50 million additional dollars.
  • Deferred ~$12 million in debt payments coming due into future years
  • Received at least $10 million in one-time payments from the state for capital purchases.
  • had more unfilled positions than planned as city employees rushed to retire before Jan 1, 2006 when certain retirement benefits would expire.
The city does count on casino revenue. Briem cited an article from the Trib regarding the perspective of the state oversight board chair:
Pittsburgh's financial watchdog said Friday it wants Gov. Ed Rendell to guarantee the city's local share of gambling money even if a planned North Shore slots parlor doesn't open on schedule next year.
According to Pittsburgh's $419 million 2007 budget and five-year plan, the city expects to receive $1.9 million in gambling revenues in 2008; and at least $10 million in 2009 and EACH YEAR THEREAFTER.
"There will be gaming monies coming to the state even though our casino won't be built," said Barbara McNees, chairwoman of the state-appointed financial oversight board. "Can those monies be directed to the city of Pittsburgh in the interim? That's certainly what we'll be requesting."
Other assumptions in the original budget proposal and a perspective from Peduto from an Oct 2006 PG article:
The budget assumes the city will collect $7.7 million next year from a slots parlor, down from the original estimate of $17.7 million. It figures the city will lose $6 million in collections on the $52 tax on people who work in the city, because of a change in the collection schedule the Legislature is considering.

Councilman William Peduto said he supports the lower council budget, but will vote against the overall five-year plan because it overestimates state aid, nonprofit group contributions and age tax revenue.

"This is not a five-year recovery plan," he said. "It's a one-year recovery plan, and it's a five-year financial disaster" that could lead to layoffs or tax hikes in later years.
Well, those projections have now come to bite the administration in the behind and Ravenstahl is now stuck in traffic in order to remedy threats to the soundness of his budget. We learn that he has gone to Harrisburg to lobby for guaranteed casino revenues (also pension relief and, all of a sudden, public transportation), even though it will not likely even open in 2008, and for the $10 million the he wants for the city even though it was only offered last year as a one-time payment from the state for capital purchases. The PG covers this lobbying trip here and here. From the PG:
The mayor is trying to boost the amount of state aid to the city from the $6 million proposed in Gov. Ed Rendell's 2007-08 budget to the $10 million the city got in the fiscal year that expires June 30. The city's 2007 budget and long-term plan count on $10 million from the state every year.
The mayor said that much of the $10 million in state operating funds the city got in 2006-07 went for public safety costs, but added, "The money is flexible and we will work with the state to be creative and help meet our needs."
In the event that the state does not come through with the $10 million requested and doesn't guarantee the shortfalls in the casino revenue projections for the city, Ravenstahl's budget will be short about $6 million ($1.9 from casino revenues and about $4million from the gap between the $10million requested and the $6 million in Rendell's budget).

So, what to do? Like Sala said, we see why the goal is to get these projects (the casino) moving. Anticipating these budget gaps, Ravenstahl is pushing the casino construction 'fahrd' before stakeholders agree on what new traffic problems will arise because of the casino. The PG reported over the weekend, "Mayor wants casino construction before traffic study".
"I understand the concerns the Steelers would have with waiting until after the casino is open," Mr. Ravenstahl said. "I think it should be studied. Obviously you won't have as good of a feel for the impact until the actual traffic is there. But nevertheless, I think it is important to have a study completed prior to the facility opening."
Why study the damn traffic ex post facto? I don't see the logic unless I consider Ravenstahl's motivation for doing so - the city's budget. However, Rooney understands casino traffic and he's not happy with Ravenstahl's proposal to 'move fahrd'. From the Online Gambling Paper:
Rooney's family owns Yonkers Raceway outside New York City, and Art Rooney II says that he is very familiar with casino traffic, and that a study must be conducted before the casino building plans are approved. He fears casino traffic could double exit times for some fans leaving Heinz Field on game days, especially those heading across the West End Bridge.
Both this publication and the PG are reporting that the Steelers are threatening to sue the city if it goes ahead with construction prior to studying and resolving the traffic concern. Remember the Science Center had its own concerns. Elsewhere (and I can't find the source now), PITG, operating company for Barden's casino, said that they were frustrated because they had provided the gaming commission with everything requested and this is yet another barrier to getting the casino up and running. And Rendell has said that the state would put up the financing for the Penguins arena construction (but not the casino, right?) if the casino is not up and running according to schedule.

So, Ravenstahl proposes loose projections in his 'big surplus' budget, probably anticipated having
to appeal to the state to remedy it, goes to the state to lobby for $$$, and now risks yet another lawsuit against the city because he needs to rush the casino ahead of civic planning concerns so that his 'big surplus' doesn't turn into a big boondoggle. But perhaps this is the right time to bark at the state anyway.


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Kick-ass post, my friend.

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