City Council approves one-year tax break for Longview casino

This is how it happens and the host community takes the tax hit:

City Council approves one-year tax break for Longview casino
By Andre Stepankowsky / The Daily News


The Longview City Council Friday morning agreed to give a one-year break in the gambling tax that it hopes will keep the city's only casino alive.

Island Casino owners Jim and Regina Bakunowicz sought the break to help offset declining revenues and rising costs, including a recent increase in the state minimum wage law they said will cost them about $300,000 a year.

Their case presented a stark choice to the city, which itself is in a revenue crunch because of the recession — approve the tax break or see 300 jobs vanish at the Commerce Avenue casino and night club.

"In our industry, about 80 percent of our revenue goes into payroll. As payroll increases there is no way to offset that with revenue" in the struggling economy, Jim Bakunowicz told the council. The casino has not been profitable since 2008, he said.

"The only way we can make things work is if we have an abatement in these taxes," he said.

The gambling tax has been 11.25 percent on gross earnings. Acting just after midnight at the end of a five-hour meeting, the council unanimously agreed to a sliding scale gambling tax for one year. Before the tax change becomes official, the city staff will have to prepare an ordinance and present in for formal council adoption at a future meeting. Under it, taxes will be:

• 1 percent if revenue average $10,000 a day.

• 3 percent if average revenues of $15,000 a day.

• 5 percent if average revenues of $20,000 a day.

• 10 percent if average revenues exceed $20,000 a day.

Bakunowicz had asked no taxes be assessed on the first $10,000 in daily revenues, which would have meant the casino wouldn't paying any gambling tax at all on its current earnings, which the Bakunowiczes say are about $8,500 a day.

Councilman Tom Hutchinson asked that the casino pay at least a 1 percent tax on the first $10,000 in revenue, and the council agreed, with councilmen Ken Botero and Chet Makinster voting no, preferring the no-tax approach.

The entire council then voted to accept the sliding scale tax for one year.

Island Casino is about $270,000 behind in its gambling tax payments to the city, and the Bakunowiczs said they will continue to make $5,500 monthly payments to pay off that debt.

The city collected about $382,000 in gambling taxes from Island Casino in 2010, down from a high point of $879.000 in 2003. Under the plan adopted Friday, the casino would pay about $31,000 if its current income continues. In addition, it will make $66,000 in payments on is back taxes.

Council members, however, accepted Bakunowicz's plea that there would be no tax payments or jobs if the casino didn't get some relief.

"They still have an obligation to pay some kind of taxes. We recognize the money is not there and they're operating on a pretty thin margin," Mayor Dennis Weber said in a phone interview Friday morning.

The Bakunowiczes emphasized that they're continuing to pay all other taxes and that the state carefully scrutinizes their books.

"I'm not trying to make a bushelful of money and leave town," Jim Bakunowicz told the council.

The couple said they're seeking approval to add slot machines and hope the economy rebounds.



Read more: http://tdn.com/news/local/city-council-approves-one-year-tax-break-for-longview-casino/article_462beb58-491e-11e1-b5d5-0019bb2963f4.html?mode=story#ixzz1mCZ1ePrs