Ltr Spkr - House C. Rants, GamiCity Manager's Office
C~ty Hall
50 West 13th Street
Dubuque, Iowa 520014864
(563) 5894110 office
(563) 5894149 fax
etymgr~cityofdubuque.org
VIA E-Mail and
1st Class Mail
christopher rants~leqis.state.ia.us
March 19, 2003
The Honorable Christopher Rants
Speaker of the House
Iowa House Chamber
State Capitol Building
Des Moines, IA 50319
Re: Impact of Gaming Tax
Dear Speaker Rants:
it was a pleasure meeting you at Dubuque Night. Thank you for taking your valuable
time to attend. Also, thank you for being willing to listen to our efforts to resolve the
gaming tax issue with a win-win scenario, before the courts create one winner and one
loser, or even two losers if the Dubuque Greyhound Park and Casino is forced to close.
As the Legislature continues to discuss alternative gaming taxes, I believe it is
imperative that you understand fully the impact these changes Would have on the City of
Dubuque.
The City of Dubuque owns Dubuque Greyhound Park and Casino and it was built with a
General Obligation Bond issue approved by a referendum, then leased to the not-for-
profit Dubuque Racing Association. As part of that lease, the DRA pays 50% of its
annual operating surplus to the City of Dubuque to support capital improvement
projects. The remaining 50% is split 25% for grants to not-for-profit organizations, and
25% is kept by the DRA for needed capital improvement projects at Dubuque
Greyhound Park and Casino.
Since its inception, DRA has paid to the City $30,105,500 for capital improvements after
the DRA retired the City's G.O. debt that built the facility. Some of the major
improvements accomplished with these funds include:
· $8,314,000 for industrial park development (5 separate industrial parks totaling
950 acres)
· $9,070,000 for Riverfront Development (including leveraging the $40 million
Vision Iowa grant to partially fund the $188 million Amedca's River project)
· $1,457,000 for Five Flags Civic Center maintenance projects
Service People Integrity Responsibility Innovation Teamwork
The Honorable Christopher Rants
March 19, 2003
Page 2
· $1,000,000 for opening of the Town Clock Plaza
· $1,593,000 for park maintenance and development projects
· $754,000 for swimming pool related improvements
· $1,987,000 for replacement of the City Garage facility
· $380,000 for Airport improvements
Over that same time frame, not-for-profit organizations have benefited from the
distribution from the DRA of $'15,052,750 for one time expenditures.
Due to uncertainty regarding the final outcome of court decisions relative to gaming
taxes, the City of Dubuque, through the Fiscal Year 2004 budget process, made certain
gaming revenue assumptions related to the gaming tax to develop revenue projections
for the next five years. These assumptions were used in a model to determine the
estimated surplus distributions that would be made by the Dubuque Racing Association
(DRA) in the upcoming five years.
Looking to the future, the City of Dubuque has budgeted $29,337',422 in anticipated
surplus distributions over the next five years for capital projects. These distribution
funds are not used for property tax relief. However, the City is frugal in expenditures
and has not had a property tax increase for the average homeowner in nine years. In
fact, in five of those years, there has been a property tax decrease. These distribution
funds have been programmed as follows:
· to provide $9,306,000 for the Port of Dubuque projects (including America's River
project),
· $6,671,500 for stormwater projects to address flooding problems - this will help
protect over 1,150 homes that have flooded three times in the last ten years,
· $1,443,500 for street construction costs,
· $1,102,000 for fiber optics extensions,
· $1,146,500 for fire department pumpers and related improvements,
· $1,612,000 for Airport terminal replacement,
· $3,945,000 for continued industrial park development,
· $2,571,000 for park maintenance and development projects, and
· $2,516,0000 for Five Flags Civic Center renovation projects.
To the extent the Legislature decides to change the gaming tax to the maximum rate of
36%, this will mean a reduction in the City's capital improvemen~ budget of $16.5 million
or almost a 50% reduction in programmed expenditures over th~ next five years. That
would gut the above listed anticipated expenditures. Some of the most likely targets for
reduction would be Port of Dubuque support projects and stormwater management
projects.
Although only a portion of the $9,306,000 Port of Dubuque projects are part of the
required match for the Vision Iowa funds, all of these projects support and expand on
the development opportunities in the Port of Dubuque. These projects would certainly
be in jeopardy with any significant reduction in DRA distribution ~monies.
· The Honorable Christopher Rants
March 19, 2003
Page 3
Stormwater management projects have been a high priority for City Council and over
the past six months, Council has adopted a stormwater management program, created
a Citizen's Advisory Committee, and adopted a stormwater user fee, and created a
stormwater utility that is subsidized with gaming revenues. City Council would need to
revisit the stormwater utility fee and/or reduce or slow down implementation of needed
stormwater projects. The majority of these projects addressed areas within the city
where residences face significant flooding each year.
Finally, I would also point out that although the not-for-profits don't budget in advance
for receipt of DRA distribution funds, they have become an excellent source for needed
capital improvements for these agencies who struggle each year to raise enough funds
to cover annual operating expense. These agencies would lose over $7 million over the
next five years. These service agencies provide an invaluable community service, and
need to maintain their facilities and equipment in adequate operating order. Each year
the DRA goes through a review process to try to meet critical needs for these agencies.
They historically have requests far exceeding available resources. To reduce available
funds for distribution to these agencies will only cause these facilities to deteriorate
further and the agencies to operate with obsolete equipment that is expensive to
maintain.
Dubuque voters supported the DRA with an 80% positive vote in the 2002 referendum.
The voters recognize the value of the 950 jobs and over $21 million in annual payroll
that gaming provides in Dubuque. But they also realize the negative impacts of gaming,
while believing that the millions of dollars that go to the State, City and charities help to
offset those negative effects.
Governor Vilsack formed a Gaming Tax Task Force that recommended a graduated tax
on boats and tracks that is revenue neutral. I urge you to support that recommendation.
Sincere,~/~]
Michael C. Van Milligen
City Manager
MCVM:jh
cc: Governor Tom Vilsack
Senator Mike Connolly
Senator Julie Hosch
Senator Roger Stewart
Representative Pam Jochum
Representative Steve Lukan
Representative Pat Murphy
Representative Robert Osterhaus
Representative Gene Mantemach
The Honorable ChristOpher Rants
March 19, 2003
Page 4
Mayor Terry Duggan
Dubuque City Council
Angela Simon, Chair, Dubuque Racing Association
Bruce Wentworth, General Manager, Dubuque Racing Association