Uses of the Cape Girardeau Casino Fund

As I begin to compile information for my 2023 State of the City address, I'd like to first address the city's Casino Fund. Like many other "special revenue funds", the Casino Fund is part of our annual budget, and includes all the budgeting and auditing that is required. As the city has recently made some significant changes to that fund in both its structure and use, I want to use this space as a helpful update.

As the Isle of Capri Casino (now Century Casino) was established, the Cape Girardeau City Council in 2012 established a Casino Funding Policy. The purpose of this policy was, and continues to be: 1) guidance for the city council in the use of revenue from casino taxes, and 2) transparency for the public in this use. You can find information pertaining to the policy on the city website at cityofcape.org/casinofundpolicy.

A founding priority of the Casino Funding Policy was that revenue generated is not to be used for the city's continuing operating expenses, such as salaries, annual road improvements, or department expenses. This remains the guiding principle of the policy today, for one very compelling reason -- using the revenue stream from a single private gaming venture, even a very large one like the Century Casino, is simply not sound practice on which to base the city's operating expenses. We are thankful that the Century Casino is well established and is projected to continue in a successful manner here in Cape, but the financial guidelines laid out in the Casino Funding Policy should remain the same.

Consider the impact of the Casino Fund revenue if, hypothetically, the casino were to close -- that revenue would obviously go to zero, and the city would not be able to make up that revenue for salaries or road maintenance quickly.

Additionally, another risk in using casino revenue is the casino, like all in the state, is licensed by the Missouri Gaming Commission. As the Gaming Commission has the ultimate say in issuing gaming licenses, the casino and its revenue is controlled by elements outside of the city's influence.

It is also necessary to point out that gaming demands can change significantly over time. Because of these possibilities, using casino funds for the city's operating expenses is not sound financial practice for any municipality, and this was the strong advice coming from other casino cities in 2012.

For these reasons, the Casino Fund Policy of 2012 laid out several sub-funds for expenditures. Initially, the categories were:

1) Casino Obligation -- up to 10-15% of receipts, with 3% going to our "Adjacent Communities" of Jackson, Scott City and Cape County. Approximately 8% goes to Downtown Cape capital improvements, and up to 30% of that may be used in city support of Old Town Cape's annual operation.

2) Legacy/Endowment -- up to 10-20% of receipts to create an endowment for the city to use future interest.

3) Capital Improvement -- up to 40-60% of receipts to use for projects in the city's Capital Improvement Plan. The best known use of this had gone towards an annual debt service payment of $460,000 for the Greater Cape Girardeau Business Park on LaSalle Avenue, which the city bought from SEMO in 2013 with the hopes of attracting large scale industry to the area. The Business Park was sold by the city in 2022 and this debt service was retired.

4) Innovation Fund -- up to 20-30% of receipts to support one-time costs the city can use to alleviate operational budget costs. Past uses of this have gone towards police body cameras and other equipment, radio interoperability upgrades, 911 systems upgrades, trash collection vehicles and routing software, and plan review software, just to name a few.

After 10 years of operating under this Casino Funding Policy, city staff and council have undergone many months of discussion on possible new adaptations for best uses. The new policy, approved last month, restructures the sub-funds in this way:

1) Casino Obligation -- remains the same.

2) Legacy/Endowment -- will no longer have additional receipts put into it. The current principal amount is $1,343,061.

3) Capital Improvement/Innovation/Priorities (CI/I/P) -- have combined the remaining sub-funds, and will receive approximately 85% of revenue, to be used for the same purposes as before.

The city council and city staff believe this adapted policy, while keeping the original objectives of the Casino Funding Policy, will allow the city better flexibility in its use. The past uses of this fund will continue in much the same way, with one large exception.

Last month, the city council voted unanimously to use $600,000 annually from the CI/I/P sub-fund to support renovations of the Houck Stadium complex, to continue 17 years for a total of $10.2 million.

As this facility is a prominent fixture in the downtown area, has a large impact on the economy of the downtown area (and thus the city at large), and will allow SEMO to use the complex for expanded uses that will attract additional events and visitors, it is seen as an appropriate use of the Casino Fund, and one that is in keeping with the original intent of the policy.

With all this, there is some concern that this adapted Casino Fund should be used for police salaries or for road improvements. I hope my explanation here has helped make clear why the city is not able to use this particular fund for those purposes.

The Casino Fund Policy was created to guide investment of casino revenue into capital projects that will have a direct and ongoing impact on the city's economy, and to do so in a way that doesn't use tax revenue allocated for operations.

Using Casino Fund revenue to support the Houck Stadium renovation will do exactly that. The goal is to see this city support stimulate the sales, hotel/motel and restaurant taxes that do have a positive, direct bearing on our operational budget, and thus impact annual salary and infrastructure budgets.

Next month I will begin a three-part State of the City address that reflects on the annual budget as it pertains to public safety, infrastructure and economic development.

Stacy Kinder is the mayor of Cape Girardeau.