$2.4M from casino … where does it go?

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REVENUE MAKING — A $25 million hotel is being constructed at the Oxford Casino adding to the potential positive financial impact on the town of Oxford and Oxford County.

PARIS — The town of Oxford and Oxford County received a combined $2.4 million in net revenues from the Oxford Casino in 2016, according to figures released recently by the Maine Gambling Control Board.

According to the board, the town of Oxford received $1,297,129 in slot revenues and $312,757 in table revenues. Oxford County received $648,564 in slot revenues and $156,378 in table revenues.

In total the town of Oxford received $1,609,886 and Oxford County received $804,942 from Casino revenues in 2016.

Simply put, it’s a lot of money – $2,414,828 to be exact.

But where does this money go?

The answer to that question is not as simple as it would seem.

“There is no easy way to tell where money from the Casino funds is spent exactly,” said Town Manager Becky Lippincott.

In 2010, voters across the state approved the expansion of gambling in Maine and in summer 2012 the Oxford Casino on Route 26 in Oxford was opened. It was then, and is still, seen as the largest economic catalyst in the region – creating jobs, expanding existing businesses and opening new ones, including the construction of a $15 million Hampton Inn directly across the street and now construction of a $25 million hotel on the Casino premises.

The Casino also came with investment costs to the town, including the development of sewer and water systems to support the Casino and its possible future expansion, plus related business growth in town.

Local officials say the Casino money has been crucial to the financial success of the town of Oxford and Oxford County not only to offset direct impacts from the Casino but also as a way to reduce the tax burden on property owners.

‘Cascade of revenues’

According to the referendum that set up the Oxford Casino, 46 percent of net slot machine income and 16 percent of net table game income goes to the state through the Maine Gambling Control Board.

The five-member Gambling Control Board is responsible for the licensing, regulating and inspection of the corporations, people and machines that operate slot facilities and the state’s two casinos — in Oxford and Bangor. The Board also licenses the companies that sell associated equipment to the slot and casino operator(s).

The board divvies up the money in a so-called “cascade of revenue” in amounts specified by the referendum among various entities including 2 percent of the net slot machine revenues and an additional 2 percent from table games that goes to the host municipality Oxford. There is no contingency placed on how the money is spent.

A total of 1 percent of the slot revenues and 1 percent of the table games goes to the host county, in this case Oxford County, specifically for “costs related to gaming.” That restriction is not as strict as it would appear on the surface, said Oxford County Administrator Scott Cole.

A total of 25 percent of the slot machine revenues and 10 percent of the table games from the Oxford Casino goes to the Department of Education for kindergarten through grade 12 public schools. Other slot machine revenue is divvied up, including 1 percent for agricultural fairs, 3 percent for Maine Community College scholarships, 4 percent to the tribal governments of the Penobscot and Passamaquoddy tribes, and so forth as the revenue “cascades” across agencies and others designated to receive funds through the legislation.

Hollywood Slots in Bangor – the only other casino currently operating in the state – has a similar “cascade of revenue” distribution system but it is set up differently. In this case the host municipality receives only 1 percent of the net revenues for slots and 2 percent of the revenues from table games. The host county, Penobscot County, gets nothing.

Over the past few years, there have been attempts to change the funding method – including a bill that would have taken away the casino money from the town of Oxford and Oxford County.

Argues for money

In 2013, a Newfield state representative filed a bill that would use all Casino revenue for K-12 education statewide, removing it from others such as the town of Oxford and Oxford County.

Instead of divvying up its share of the profits from the Oxford Casino in a so-called “cascade of revenue” that was approved in a statewide referendum, the state would instead use all the revenue to fund K-12 public education.

The bill failed to move forward for approval but not before many, like former Oxford Town Manager Michael Chammings, objected to the move.

In his testimony on April 8, 2013, before members of the Committee on Education and Cultural Affairs, Chammings argued that the town expected expanded demand on its public services and the town planned on offsetting these expenses with its 2 percent disbursement from the Casino revenue. Chammings estimated at that time the town would spend more than $500,000 a year to expand the services.

Additionally, the town had invested more than $1.6 million in water expansion and was planning on a new wastewater treatment facility mostly due to the impact of the Oxford Casino. The expansion, Chammings said, would allow motels to locate near the Casino and was projected to increase the Casino’s revenue by 15 percent creating millions of more dollars towards education funding.

The town of Oxford, he said, would have no incentive to help expand the wastewater treatment plant facility if there was no revenue from the Oxford Casino to offset costs.

The bill was eventually killed and the town’s $28.2 million wastewater treatment plant near the intersection of routes 26 and 121 began operation last fall. The Casino is the biggest user to date.

So where’s the money?

Tracking the millions of dollars that have flowed to the town from the Oxford Casino revenues is not as simple as opening a checkbook to see what went where.

The reason, said Lippincott, is because all revenues – except those used to lower the tax rate each year – are put in the town’s General Fund. The General Fund is the town’s primary operating fund for general government purposes – typically accounting for expenses and revenues that result from providing services and producing and delivering goods.

The exception are those monies required to be accounted for in another fund, such as the Wastewater Fund, which is accounts for the operation of the wastewater treatment plant.

“It’s a washing pot,” said Lippincott. “If you have three jobs and you pay a check, which job are you pulling the money from?”

The majority of the Casino money – the town’s biggest source of revenue, along with other sources such as property taxes – is used to lower the tax rate.

Lippincott said that at town meeting each year in June, voters decide how much money they want to spend on what but they don’t decided where the money is going to be taken from. The selectmen do that in August when they decide how much of the Casino money they will use to keep the tax rate low, she said.

The board then authorizes the draw down of the money at that time.

In fiscal 2016 for example, the town received $1,604,466 in Casino revenue. Of that amount $975,000 was used to lower the tax rate, Lippincott explained. The remaining $629,466 was rolled into the General Fund’s Undesignated Fund Balance. The Fund Balance is then broken into five classifications based on restrictions placed on how the money can be spent or whether there is no restriction on the money.

While the town does not track specific revenues to expenditures when it comes out of the General Fund, the Casino money has been the foundation for capital improvements, including the wastewater treatment plant that services, in large part, a large section of the the commercial and business strip along Route 26.

The Casino is the system’s largest user and is critical to the success of the treatment plant.

The town initially also expanded its police and fire departments to handle the planned impact on these services.

Police Chief Jonathan Tibbetts said the use of Casino money today has supplemented the cost of additional personnel, but in a roundabout way.

“Casino revenue goes into the town’s general fund. The majority of it is used to offset taxes. The remaining goes towards capital improvement. … To answer your question the Casino revenue does sort of offset the cost to add personnel,” Tibbetts said.

The money initially was also used to replace vehicles for the town’s municipal fleet, according to Chammings at that time.

The town of Oxford invested more than $1.6 million in water expansion.

The Fund Balance was given a financial shot in the arm.

These are all things that were dependent on Casino money – reducing property taxes and supplementing capital projects and expenses, said officials.

County use of money

Like the town of Oxford, Oxford County officials also set aside a large amount of its Casino revenue windfall to offset county taxes each year.

According to Oxford County Administrator Scott Cole, the county currently receives approximately $14,000 per week from the Casino through the Gambling Board. This translates to about $728,000 per year, he said.

Of that amount, $600,000 per year is used to offset property tax and the residual has been committed to covering jail inmate boarding costs incurred by transferring inmates to jails in other counties. Currently they are transported to Two Bridges Jail in Lincoln-Sagadahoc, Cole said.

During the first year of revenues, about $275,000 was used to buy 10 new cruisers for the Sheriff’s Office, with the understanding that the money would be repaid to the General Fund in three annual payments, said Cole.

Although the Maine Gambling Control Board specifies that the 1 percent of the slot revenues and 1 percent of the table games that goes to the host county is intended for “costs related to gaming,” Cole said the mandate is not as straightforward as it seems.

Cole said the statute “doesn’t quite say that and a related legal opinion supports county’s current use of money as unrestricted in nature.”

According to Cole, the county draws $50,000 each month from Casino revenues it receives, adding up to $600,000 for entire year as tax relief. It is deposited in the account from which the county pays its bills and wage and benefit costs for employees.

The Casino money has also paid for vehicles.

“The cost of vehicles is part of the overall expense and the Casino funds are within the non-tax revenue amount,” he said.

Of the county’s 28 police vehicles, 26 assigned and two spares, held in reserve, plus three more for jail operations, he said, there is also one pickup – in rusted condition – for civilian use.

Since 2010, the county has “bought five and traded five” each year. The three jail vehicles are rotated out of their lifespan based on mileage.

Additionally, Cole said the county encumbers about $67,000 each month (representing that $804,000 annually) for inmate boarding, currently at Two Bridges Jail.

Cole said he is concerned about the impact of inmate costs on the Casino funds to the county.

“A year ago the county received a one-time cash infusion from the state to cover jail costs,” said Cole. “In the long run, without legislative action regarding jails on a statewide basis, the inmate costs will entirely consume Casino funds.”

Revenue to date

As the new year begins, the local area continues to see an uptick in revenues flowing into the town and county coffers from the Oxford Casino.

According to the figures released from the Gambling Control Board, the total distribution from the Oxford Casino tables games in January was $222,542. Of that amount the town of Oxford received $27,817 and the county received $13,908.

In January, a total of $2,280,191 was distributed from the slot machines. The town of Oxford received $99,138 and Oxford County $49,569.

In February, $186,999 was won in table games. Of that amount $23,374 went to the town of Oxford and $11,687 went to Oxford County.

In February, $2,200,547 was won from slot revenues. Of that amount $194,814 went to the town of Oxford and $97,407 to Oxford County.

While there have been attempts to expand gambling in Maine, which could reduce the revenues from the Oxford Casino, so far none have prevailed.

A bill to expand gambling in southern Maine failed in 2016 when the House and Senate killed a bill to create another casino in that region. So for now, Oxford Casino continues to advertise itself as “Southern Maine’s Casino.”

With the help of the Oxford Casino funds, the future looks bright, say local officials.

Bright green that is.

ldixon@sunmediagroup.net