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* As you are surely aware of by now, Mayor Daley has announced a 99-year lease of Midway Airport for $2.52 billion. But far less than half that will be realized as profit…
The city, which must repay about $1.4 billion of existing debt on the airport, would net about $1.1 billion, which the mayor said would be used for infrastructure projects.
* This is an important point which is being lost in the coverage. Pensions are also in the mix…
Chicago committed to spending about 90% of the remainder on infrastructure and to help trim its $9 billion unfunded pension liability under state legislation approved in 2005. That leaves about $100 million from the transaction unrestricted. [emphasis added]
* And layoffs and budget cuts are still expected…
Mayor Richard Daley confirmed [Tuesday] the city plans to lay off about 1,000 workers as part of his plan to cope with a major budget hole.
“We’re in a dire situation,” Daley said. “There’s no other way.”
* These deals don’t always work…
Stewart International Airport near Newburgh, N.Y., was operated by UK-based National Express Group, but that lease was sold to the Port Authority of New York and New Jersey because it was not generating enough revenue, sources said. British Airports Authority gave up the Indianapolis International Airport lease for the same reason.
* And you can expect to pay more…
But as with previous Daley deals to privatize city parking garages and the Chicago Skyway, costs for the flying public are expected to rise. Transportation experts predicted that Midway’s private operator could charge higher prices for the basics at an airport that is particularly popular with budget-conscious travelers.
* Meanwhile, the city treasurer has these words for residents concerned about the Wall Street gyrations…
The city’s portfolio of money is safe.
* State Treasurer Alexi Giannoulias says the same…
Wall Street’s troubles aren’t putting Illinois’ state investments at risk, but the recent economic decline means they will generate less income than in recent years, Treasurer Alexi Giannoulias said Tuesday.
“The good news is that our portfolio is safe,” he said. “Is this going to have a huge impact on the state portfolio? That remains to be seen.”
Giannoulias’ office invests about $8 billion in state taxes and fees. It also administers the Illinois Funds, which invest $6 billion on behalf of state agencies, local governments and other taxing entities.
None of that money was put into asset-backed securities or other forms of investing that have taken dives lately, Giannoulias said. But interest income for the current fiscal year still is expected to be half as much as it was a year ago, he said.
* But the state’s casino revenues are dropping like a rock…
Illinois’ riverboat casinos are seeing a dramatic drop in revenue, adding to the state’s money problems and possibly renewing efforts to change Illinois’ smoking ban. […]
While state lottery revenue climbed a little, riverboat casino taxes slumped from $685 million to $564 million in one year — a drop of $121 million, or nearly 18 percent. Lottery revenues topped riverboat money for the first time since 2002. […]
The state numbers show that admissions dropped slightly statewide in fiscal 2008, which ended June 30, down about 2 percent from the year before. But people who are still going to the boats are spending significantly less when they’re there, the figures indicate.
Tom Swoik, executive director of the Illinois Casino Gaming Association, said many gamblers enjoy smoking while playing slots or tables. Now they gamble for a couple of hours, but take breaks to smoke and sometimes don’t return.
St. Louis and Iowa casino revenues are up, while Illinois’ are down. Those two states have no smoking bans.
posted by Rich Miller
Wednesday, Oct 1, 08 @ 10:00 am
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The anti-smoking Carrie Nation’s are going to have to compromise. The technology is there to minimize second-hand smoke. The state is losing a lot of money on a dubious feel-good ban.
Comment by wordslinger Wednesday, Oct 1, 08 @ 10:06 am
And how are the State’s Pension Funds Investments being impacted ?
Comment by A Citizen Wednesday, Oct 1, 08 @ 10:07 am
What I do not understand is why the “state” has not made this a revenue stream? You have a smoking ban in place, UNLESS you buy a special permit to have smoking in your place of business. In addition you need to have smoke eaters to cut down on the second hand smoke. State makes money and business are happy.
Comment by Question for you Wednesday, Oct 1, 08 @ 10:10 am
Who are the lobbyists/consultants for the winning bid??
Comment by Suburbs Wednesday, Oct 1, 08 @ 10:11 am
The Midway deal stinks to high heaven. Daley picked the worst possible time to forfeit an asset. He’s sacrificing decades of revenue for a one-time payout, the bulk of which will only be used to partially relieve debts and liabilities.
I do agree with his statement that Springfield and Washington could learn something from Chicago, and will hopefully use this soon to be boondoggle as a cautionary tale.
Comment by The Doc Wednesday, Oct 1, 08 @ 10:19 am
It’s absurd — completely absurd — to think that you’re going to gamble and not smoke. Or, worse yet, be told that, yeah, you can gamble your money away — but, uh, no, put that cigarette out.
If I’m a smoker (and I’m not), I would smoke and play cards. It’s a couple of weekend vices — and so what? The house has the odds for nearly everything in the first place, and if I want to whip out a Marlboro while I see my chips scooped away, I’m gonna whip out my Marlboro.
There comes a point where no matter the reality of smoking — and the health issues — it’s a thing that occurs. And as this thing, it’s absurd to pretend it doesn’t occur.
In movies? Gamblers smoke. Look at any French gangster film from the 50’s or 60’s. Those guys smoke. And why not? Who says this? Who makes these absurd distinctions? Some annoying little politician attempting to make himself look bigger by regulating vice.
Comment by Macbeth Wednesday, Oct 1, 08 @ 10:46 am
Its a provable fact - smokers are gamblers. Those who have no problem flushing their money down the toilet, have no problems flushing their health down it either.
Comment by VanillaMan Wednesday, Oct 1, 08 @ 11:01 am
Illinois appears to do everything in it’s power to not generate revenue. I believe it is a combination of corruption and arrogance.
Instead of building casinos where they will attract out of state patrons, we put them in the most out of the way places possible. We allow other states to use our citizens money to pay their states bills. For the closest casino to Chicago to be in another state is pitiful.
Couple that with banning smoking and we might as well provide free transportation to send our money away. Oh wait, the biggest casino patrons, the seniors, ride the free Pace buses that takes them over to Indiana where they spend their fixed incomes.
Well at least the lottery appears to be doing well, so we better sell it so someone else can get the money.
Arrgh.
Comment by Phineas J. Whoopee Wednesday, Oct 1, 08 @ 11:12 am
Why don’t we just raise the cigarette tax by a dollar a pack - that would make up for the loss in revenue
Comment by take it and run Wednesday, Oct 1, 08 @ 11:41 am
There will be long term health care savings from smoke-free. Let’s try to think past the next election.
Comment by Chief Wednesday, Oct 1, 08 @ 11:46 am
Meh, I wonder if I should be broken hearted at the news that casinos aren’t producing the revenue like they were expected to. Whether or not smoking is allowed or not.
Comment by Levois Wednesday, Oct 1, 08 @ 11:50 am
Since the smoking ban has improved everyone’s health and slashed our tax revenues, there is no reason to spend billions of dollars we don’t have on universal health care, right?
Comment by Fan of the Game Wednesday, Oct 1, 08 @ 11:55 am
== Why don’t we just raise the cigarette tax by a dollar a pack - that would make up for the loss in revenue ==
’cause they’re buying their cigarettes in Indiana on their way to and from the casino. Where they smoke, by the way, so there won’t be any reduction in Illinois health care costs.
Comment by Anon Wednesday, Oct 1, 08 @ 1:07 pm
Vegas numbers are down 16% through May 08. As I recall smoking is perfectly acceptable there. Could the issue simply be the economy is tighter and, as more states look to gambling as a funding solution, there are only so many people who actually gamble. Adding more options simply cuts the same pie in smaller pieces.
Comment by zatoichi Wednesday, Oct 1, 08 @ 2:53 pm
It likely has less to do with smoking than it does the addition of the huge casino in Michigan and refurbishing the ones in Indiana.
I would like to see a study on how various casinos steal customers from each other, and where the supposed “new” revenue is supposed to come from.
It’s a recession, new casinos merely mean cannibalizing each others’ customers, and if indeed smokers have a choice to go outside IL to smoke while they gamble, that might cost IL some revenue, but not $120 million.
Did the casinos, with all their ad budgets, ever consider advertising to NON SMOKERS (who outnumber smokers) that Illinois casinos are smoke-free.
Though not in favor of nanny-state bans on everything, I do notice that going to a bar for drink with friends is far more enjoyable with out the stink of cigarettes.
You’d think that “business people” (who are supposed to know something about ‘customers’), would try to tap the much larger pool of non-smokers to get them back into bars and casinos, instead of crying over lost revenue from smokers.
Comment by Bruno Behrend Thursday, Oct 2, 08 @ 9:49 am
[…] The Capitol Fax Blog State casino woes worsen […]
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