Buffalo, Erie County clash over local share of Seneca casino revenues
State holds $704,000 in escrow until the dispute is resolved
The first local payout of slot machine revenues from Seneca Buffalo Creek Casino — about $700,000 — will be disbursed by the end of June. But Buffalo and Erie County won’t see a penny at any time soon.
The money will be staying in Albany for the foreseeable future because the city and county cannot agree on a formula to split it up.
City Hall and County Hall have staked conflicting claims on the revenues, a pot of money from slot machines that’s expected to swell to as much as $7 million annually when the permanent Buffalo casino opens in 2010.
“There’s no question in my mind that the city should get 100 percent of those revenues,” said Mayor Byron W. Brown, who makes a case for the state-mandated “host community” share to flow entirely to Buffalo.
“The casino is located in Buffalo. The city provides all the police support services and infrastructure,” Brown said. “The intent of the 2002 gaming compact between the Seneca Nation and New York State was to aid weak communities, like Buffalo, with those casino revenues.”
But County Executive Chris Collins is equally adamant about spliting the payments right down the middle.
“I’m still thinking a 50/50 split between the city and county is the right formula,” Collins said.
While the casino is situated in Buffalo, it’s a regional asset, the county executive said.
“I don’t blame the mayor for seeking more, but the truth is the casino could have ended up anywhere in Erie County,” he said. “I don’t think the mayor would have supported Cheektowaga getting a check for 100 percent if that’s where it landed.”
An attempt by state lawmakers to craft a compromise, with the city receiving 75 percent of the local share and Erie County getting the remaining 25 percent, failed to make it into the final version of the 2008-09 state budget.
Under the 2002 agreement between the Seneca Nation of Indians and the state, the Senecas must share a portion of slot machine revenues with the state and the host community. Over the life of the 14-year agreement, the state’s share climbs from 18 percent to 25 percent, with the state passing along 25 percent of its take to the locality.
The temporary, slots-only Seneca Buffalo Creek Casino, which opened last July, generated $12.8 million last year from its 124 machines. Since the scale starts from the date of the compact, the Senecas now pay the state 22 percent of that take, putting the local share at $704,000.
This and subsequent local payments will be placed in a state-controlled escrow fund until a formula is in place to hand out the local dollars.
A similar situation developed when the Seneca Niagara Casino opened in Niagara Falls in 2003. About $23 million in local revenues sat in escrow for nearly two years after a temporary sharing agreement expired and lawmakers debated a permanent resolution.
About the only thing Brown and Collins agree about on divvying up the slots money is that they are unlikely to strike a compromise at any time soon.
“This is on the county agenda, but not at the top,” Collins said. “If I were a betting person, I’d say we’ll be discussing this within the context of other issues, like the county’s contract to maintain city parks and funding of other regional assets.
The mayor said that while he would prefer a quicker timetable, he is not confident he and Collins can come to an agreement.
“It would be great if we could reach a compromise and go jointly to the State Legislature, but from any objective evaluation, that’s not likely. There’s a much greater chance Gov. [David A.] Paterson and the state lawmakers will end up settling this matter,” Brown said.
The mayor also noted the city has an agreement with the Senecas that requires it to designate 15 percent of its slot take for economic development efforts in the neighborhoods surrounding the Michigan Avenue casino site.
“We’ve committed a portion of those dollars as an economic engine which will not only help Buffalo, but will also lead to retail and other developments that will boost sales tax earnings for Erie County,” Brown added.
The absence of a local revenue sharing arrangement opens the door to a broader discussion of how the funds should be used, according to Rep. Brian Higgins, D-Buffalo, who two years ago urged the state to forgo its share of the slots money.
“I see an opportunity to press the state to use those funds as an economic development tool for Western New York,” said Higgins, who described the casino dollars as a “drop in the bucket” in the big picture of the $100 billion-plus state budget.
Under Higgins’ plan, cultural tourism would get a huge boost through allocations to large and small cultural organizations, as well as the Buffalo Niagara Convention and Visitors Bureau and the Olmsted Parks Conservancy.
Additional allocations would be made to create economic development, public safety and neighborhood investment funds.
“This would raise the debate beyond the definition of the host community and make it more of a discussion on how to leverage these funds to aid community assets,” Higgins said.
Slot revenues from other Seneca casinos are divided among the cities and counties in which they are situated.
In Niagara County, Niagara Falls gets 93 percent of the local revenues, and the county get 7 percent. The money aids such projects as construction of a new terminal at Niagara Falls International Airport and construction projects at Niagara Falls Memorial Medical Center.
In Cattaraugus County, the local share from Seneca Allegany Casino & Resort is divided between the City of Salamanca and the county.
Through its Seneca Gaming Corp., the Seneca Nation has generated more than $295 million in slot machine revenues at its Niagara Falls and Salamanca gaming venues, which have been passed on to New York State.
