Chester using casino cash to balance budget

In the two years since Harrah's opened a slots parlor in Chester, the city has received $24.6 million as its share of gaming revenue.

While other communities might use such a windfall on high-profile projects, Chester has used it to strengthen its fiscal health. Budget deficits have long plagued the city, and its finances have been under special state supervision since 1995.

With the slots income, the city has balanced its ledger for the last two years and set up a rainy-day fund.

In the year before Harrah's opened, for example, the spending gap was $7.5 million, according to Thomas Moore, chief of staff to Chester's mayor.

"If Harrah's went away tomorrow and on the expense side of the equation, everything was equal . . . real estate taxes would have to go up by 200 percent," he said. "It's a significant portion of Chester's budget."

Money from Harrah's Chester Casino & Racetrack also has reached the city in other ways, including employment, charitable donations, and the purchase of supplies locally.

The Pennsylvania law that legalized slots parlors requires that 55 percent of annual gaming revenue be split among state, county, and local governments. The state is using most of its share to reduce local property taxes and Philadelphia wage taxes.

Municipalities with casinos receive a minimum of $10 million a year, or more if slots revenue exceeds certain levels. Philadelphia is expected to collect an estimated $26.2 million annually from its two planned slots venues.

Bensalem, home of PhiladelphiaPark Casino & Racetrack, has received $22 million in the last two years. The township used $6 million of that to hire 19 police officers, Finance Manager John McGinley said. The money also helped fund a new park, he said.

In addition, the township sent every household a check for $200 in 2007 and one for $250 last year, McGinley said.

For its part, Chester received $11.4 million from Harrah's in 2007 and $13.2 million in 2008, Moore said. The city expects it will get $12.5 million by the end of 2009, he said.

The money has become a crucial element in Chester's efforts to emerge from state supervision of its finances and makes up about a third of its budget.

The city's economic health had been precarious for years. As large employers left, Chester's population shrank from about 66,000 in 1950 to 36,854 in 2000. The city's tax base was decimated, and increased poverty and crime rates strained resources.

In the mid-1990s, Chester was in such dire straits that it was difficult to imagine a financial recovery, said Fred Reddig, executive director of the Governor's Center for Local Government Services at the Pennsylvania Department of Community and Economic Development.

But now, Reddig said, he believes Chester can pull itself out of "distressed status" in the next three to five years with the help of casino money. "They have clearly turned the corner," he said.

Moore said the balanced budget had also allowed for some tax relief. After six years of no change, wage taxes and business-privilege taxes went down in 2008 and 2009. There has been no increase in property taxes in the last 14 years.

Besides $1 million for the rainy-day fund, gaming money has gone into a $2 million capital-improvement fund, which will help finance a planned $3.9 million recreation center.

The city also bought two new fire trucks at a cost of about $1 million, and three dump trucks for the Streets Department that cost a total of $360,000.

Beyond the gaming revenue, Chester sees economic benefits from Harrah's in other ways. Of the casino's 1,050 employees, 181 are Chester residents, said Monica Bersani, a spokeswoman for Harrah's Chester Casino & Racetrack.

The company buys bread from Buono Bakery, and its vending-machine supplies from Franks Refreshment Services Inc., both local businesses, Bersani said. Hand soap, paper towels, and cleaning products come from T. Frank McCall's Inc., a Chester business since 1876.

Harrah's also spent $200,000 on a college scholarship program for 28 Chester students last year, said Vince Donlevie, senior vice president and general manager of Harrah's Chester.

Harrah's also spent $15,000 to build a computer lab at the city's YWCA, according to YWCA executive director Tara Jones.

But not all business owners are cheering Harrah's presence.

Patricia Steinberg, who owns Hardware & Supply Co. in Chester, said she spent several thousand dollars to gain state certification to do business with casinos. She had hoped Harrah's would buy supplies there. Last year, Harrah's spent about $6,000 at her store, she said. This year, the company has bought less than $100 in goods.

"The purchasing is no longer being done here in Chester," Steinberg said. "We're not even brought to the table."

John Ominski, sales director for Health Mats Co. Inc., a floor mat-service company, also was disappointed that Harrah's didn't want to do business.

"We never heard a peep," he said. "They wouldn't even talk to us about it."