Wheeling’s gambling revenue dips 21 percent

WHEELING – Gambling operations in Ohio and Pennsylvania are putting a damper on Wheeling’s finances, as the city received $420,000 less in gambling revenue during the 2012-13 fiscal year than it did the previous year.

All told, the city received $1.56 million in fiscal 2012-13 compared to about $2 million in 2011-12.

The city’s gambling revenue comes from three sources: table gambling at West Virginia casinos; video lottery machines at Wheeling Island Hotel-Casino-Racetrack; and limited video lottery parlors in the city. Revenue from each of those sources dipped during the last fiscal year.

Table gambling revenue dropped about $154,000, from $857,591 in 2011-12 to $703,993 last year. Limited video lottery machines provided $296,845, down about $27,000 from the $324,009 Wheeling received in 2011-12.

City Manager Robert Herron attributed the LVL decline to a previous error by state lottery officials, as some gambling parlors had incorrectly been listed as within city limits. This resulted in Wheeling receiving a total of about $36,000 more than it should have during a period of several years. The state withheld that amount from the 2012-13 allocation.

“I think the limited video lottery (revenue) has pretty much flattened out … and table gaming has always fluctuated since it’s been in effect,” Herron said of gambling revenue.

The most significant decline, however, came from racetrack video slots lottery, from which Wheeling received just $560,970 last fiscal year after bringing in $798,022 during 2011-12. That decline comes as the city plans to rely on a portion of the gambling revenue to ease the burden of ever-rising pension costs on its general fund – costs that are projected to double within the next 10 years.

Previously, the city had used its racetrack video lottery intake as a supplemental contribution to its police and fire pension funds, over and above its state-required contribution. That has allowed Wheeling to cut its unfunded liability in those funds.

In 2000, the police and fire pension funds were just 7 percent and 10 percent funded, respectively, compared with 40 percent and 30 percent today.

For the new fiscal year, however, Herron has proposed capping the supplemental contribution at $400,000. Any revenue beyond that would go to the general fund to help the city comply with a state law that requires any city whose pensions aren’t fully funded to increase their contributions to the plans by 7 percent each year.

During the fiscal year that ended June 30, Wheeling contributed a total of $3.36 million from its general fund to the city’s police and fire pension funds. This year, the city will pay $3.59 million into the funds – almost 12 percent of its entire 2013-14 budget.

That’s an increase state law forces the city to make, and one that Herron compared to “starting $230,000 in the hole” when crafting this year’s budget. That hole will continue to grow next year, as the general fund police and fire pension contribution will swell to $3.85 million.

In 2018-19, according to Wheeling’s pension solvency schedule – five years from now – city taxpayers will pump about $5 million in the pension plans. In 10 years, that figure will top $7 million.

“It’s an issue every year that I’ve talked about. … It’s something that we’re going to have to deal with,” Herron said.

Doing that, it seems clear, eventually will take more than capping the supplemental contribution. City Council recently enacted a new 0.5-percent sales tax that will go into effect Oct. 1, to help Wheeling keep up with infrastructure needs. The city’s also looking to save money annually by transferring operation of the Wheeling-Ohio County 911 Communications Center to county officials.

But the fact remains that 10 years from now, Wheeling leaders will have to come up with $3.4 million in additional revenue they don’t have today. And that doesn’t take into account other rising costs, such as fuel, salaries and employee health benefits.

Still, Herron doesn’t expect further tax increases or a reduction in city services – at least not in the near future.

“Nothing’s imminent, I don’t think,” he said.