The Caesars Virginia casino resort is expected to bring in $35 million in revenue for the city of Danville during the next fiscal year. This is $10 million more than the projection from the previous fiscal year, during which Caesars operated a temporary casino in the city until the opening of the permanent resort in December.
The gaming revenue will be put toward a variety of initiatives, including economic development, public safety, housing and education, according to City Manager Ken Larking’s proposed budget, which he presented at a media briefing Tuesday.
About $21.7 million of the expected $35 million from the casino is state-collected gaming tax revenue. The remainder is the local supplement that Caesars agreed to pay the city as part of its development contract. The minimum local supplement that Caesars must pay Danville every year is $5 million.
Larking recommended that most of that $5 million go toward average 5% pay raises for city employees, as well as toward the local portion of salaries, additional raises and increased health insurance costs for city school system employees.
His recommended budget strategy continues to depend on traditional revenue streams to provide core city services, rather than the casino gaming tax revenue, which could fluctuate.
“We have included less than the $5 million from the guaranteed gaming revenue for recurring expenses in the city budget,” Larking said. “Because we know it’s guaranteed … whether [Caesars] opens their doors or not, we feel comfortable using that to pay for ongoing expenses.”
Larking suggested that the remaining $30 million from the casino be allocated as follows:
- About $7.8 million for economic development initiatives
- Almost $7.4 million for capital and special projects
- About $4 million to Danville Public Schools for the local match for bonuses, school bus aids, elementary school security, early tuition costs, utility and transportation expenses and security enhancements
- $4 million in reserve for a future balloon payment on a loan to the city’s Industrial Development Authority, which was used to finance economic development projects in recent fiscal years in anticipation of casino revenues
- $1.7 million for housing programs, including $300,000 for the Danville Neighborhood Development Corporation
- About $1.5 million for lease and debt payments associated with the new police headquarters
- About $1.2 million for the city’s tourism marketing program
- $850,000 for removal of blighted properties
- About $761,000 to pay for gang prevention efforts, which were previously funded mostly with grant funds
- About $564,000 to pay for a number of new city positions, including a grant administrator, park maintenance positions for the riverfront park, an economic mobility and opportunity manager, cultural arts manager, housing coordinator and public works senior project manager
- About $279,000 to provide support for regional industrial facility authorities
- Almost $238,000 for the city’s summer internship program
These initiatives were recommended by the Investing in Danville Committee, which was created before the temporary casino opened to guide the city on how to spend these funds. The temporary casino operated until December, when the full casino resort opened its doors.
The city’s website has more details on how this revenue is being spent.
The gaming tax revenue represents about half of the increase in this year’s general fund budget, which is about $184 million. This is almost $19.5 million more than the previous year.
The other increases in general fund revenue categories include revenue from real estate taxes, meals taxes, business licenses and sales taxes.
The total proposed budget for the next fiscal year is about $379 million, which is an increase of 9%, or $32.2 million, from the previous budget.
Larking also highlighted the city’s utility department budget, which includes electric, gas, water, wastewater and broadband. This proposed budget for the upcoming fiscal year is almost $191 million, nearly $1.6 million more than the current budget.
The city is considering a utility rate increase that would raise monthly costs about $10 for a typical residential customer. Larking explained some of the nuances of these city-provided services.
“The reason why the utility fund has increases and decreases is that, largely for electric and gas, we purchase things at a cost and then we resell it,” Larking said. “We don’t own all the generation, and we certainly don’t make natural gas, so we have to buy those things off the market.”
Danville’s electric rates are average compared to the rest of the state, Larking said. Danville also provides utilities to Pittsylvania County, and 40% of electric revenue comes from outside the city limits. Gas, water and sewer rates are below average, he said.
Customers receive a bill that includes water, sewer, gas and electricity. Even with the proposed rate, Danville customers pay less per month than folks in Charlottesville, Lynchburg, Richmond and Roanoke, as well as Durham and Greensboro, North Carolina, he said.
The proposed increase in the utility fund includes money to improve the reliability of infrastructure.
Still, because Danville has a primarily older housing stock that can be poorly insulated or have inefficient heating and cooling systems, some residents use more electricity than those who live in modern homes.
Larking proposes that unanticipated casino revenue from the current fiscal year go toward the following:
- A $10 per month utility credit for qualifying residents
- A $200,000 contribution to the Neighbors Helping Neighbors program, which helps qualifying families pay for overdue utility bills
- A $500,000 investment in an energy efficiency program to help qualifying city residents pay for insulation and healing or cooling upgrades
Larking also presented the budget to the city council at its regular meeting Tuesday night.
The council will review Larking’s proposed budget and create its budget, which will be shared with the public April 30. Then, there will be a period for public input before a final budget is adopted by June 17.