Should Detroit’s casino remain shut until spring, the city will stand to lose $50 million in tax revenue.
The City of Detroit Faces Casino Tax Revenue Shortages
Detroit is in for a rough ride as the city’s bracing for millions lost due to the covid-19 crisis which throttled the healthcare system and forced mandatory shutdowns on non-essential businesses, including casinos.
During a meeting of the City Council on Tuesday, November 24, Detroit Chief Financial Officer Dave Massaron said that the city will lose $10 million in just the three-week suspension of casino operations imposed recently on the city’s three casinos.
Yet, should the closures continue until spring, Detroit stands to lose $50 million in tax revenue that is needed now more than ever, he noted. The city’s casinos have already been contributing much less to the economy with year-over-year results declining steadily in September.
Things did pick up a bit in October, when the properties reported a 6.7% increase month-over-month, but the total $101.4 million generated during the month was still an 18.9% decline year-over-year. In the period between January and October, 2020, the casinos posted $550 million, or 54.2% decline compared to the same period last year.
Time to Recommit and Restart the Industry
Arguing for the resumption of activity, Massaron said that the city would need to restart the casinos in order to allow tax dollar to start flowing again and introduce new workforce savings mechanisms.
Massaron stressed how important it was for officials to understand that the drop in tax revenue was doubly dangerous now due to the tight economic environment brought on by covid-19. The budget, Massaron argued, used to be tight, but it had only gotten worse.
He is right as Michigan is currently undergoing another shutdown, with Gov. Gretchen Whitmer ordering new restrictions. The new measures were necessary because of what Gov. Whitmer described as “the worst moment of the pandemic.”
The state has posted 347,000 covid-19 cases and registered 9,094 related deaths since the pandemic started in earnest in March as of press time. Attempting to balance the budget, Detroit mayor Mike Duggan introduced budget cuts designed to save $348 million between March 2020 and June 2021, but this may not be enough.
Because of lack of casino turnover, conferences have suffered as well, depriving the city from another $62 million in tax dollar and culling 50,000 jobs.
Detroit’s Economy’s in the Doldrums
Speaking on Tuesday, Councilwoman Janee Ayers asked Massaron how bad the situation really was for the city and what she and fellow officials could do. One suggestion was to introduce a “work-share environment,” pitched by Detroit’s deputy chief financial officer Tanya Stoudemire.
Stoudemire said that the city was exploring all options, and not just workforce savings. Other members called from Stoudemire to provide them with the exact number necessary to achieve in savings so as to avoid unnecessary anxiousness and panic.
In the meantime, Detroit will try to not only rely on its own ability to budget, but also on a second federal stimulus bill that could help the city pull through the worst of the economic downturn.