
[ Ameristar ]
This post is mostly for local consumption as they are well aware of the issues surrounding Casino Funds. Like many, I am not an advocate for casinos, but surprisingly the success of the entertainment and gaming market in East Chicago is a clear indication that East Chicago is a viable host for markets other than heavy industry.
At Issue: Where Casino Funds are committed
Background: At the time the gaming application was being drafted the community, viewing the political establishment as corrupt, were unwilling to approve a gaming permit in East Chicago if local politicians had total control over the funds. Thus the creation of a not-for-profit foundation was included in the agreement. Today Mayor Pabey is seeking total control over casino funds, and spending millions of dollars on Republican lawyers to do so.
A) State law applies to all cities with gaming and commits:
- 5% of gaming taxes to be paid to the City
- a “head tax” of $1.00 for each boat visitor to be paid to the City
B) The final agreement negotiated with the gaming operator over and beyond state statue commits:
- the gamer to pay an additional 1% gaming revenue to the City
- the gamer to pay an additional 2% gaming revenue to two non-profit foundations known as the Foundations of East Chicago (FEC)
- the gamer to pay an additional 1% gaming revenue to Second Century Corp, a for-profit org.
.
On August 27, 2009 the NWI Times ran this editorial.
OUR OPINION: GIVE EAST CHICAGO THE SAME KIND OF ARRANGEMENT OTHER CASINO HOST CITIES HAVE INSTEAD OF DIVERTING MUCH OF THE REVENUE TO THE NONPROFIT FOUNDATIONS OF EAST CHICAGO AND THE FOR-PROFIT SECOND CENTURY CORP
For the vast majority of the Time’s audience, on first blush, this argument appears to be common sense. But for those who are well aware of East Chicago politics, they can see plainly how the Times is manufacturing public opinion around the taking of community focused funds from this enormously impoverished community. In the editorial the Times employs a rhetorical slight of hand switching “A” with “B” (from above) and expecting their average reader not to know the difference. The following is my response to the above editorial. It was sent to the Times as a Letter-to-the-editor. Doug Ross, the Times editorial page editor, requested I revise the letter down to 200 words, which I did. The letter was never published, so I’m publishing here.
Your editorial concerning the East Chicago gaming funds is counterfactual to the evidence you present and the conclusions you make.
You acknowledge that “Each Hoosier city hosting a casino has its own agreement for how the city should benefit from the casino,” It then follows that each city has a “unique” agreement through which casinos enter into to provide more than the taxes they are required. The amounts and the manner in which Indiana casinos have agreed to pay beyond their statutory share vary from jurisdiction to jurisdiction, and just as important, those amounts may be paid directly to charitable organizations or to governmental organizations. In East Chicago, the casino pays its agreed amounts both to the City and private organizations, as is the case in several other Indiana gaming jurisdictions.
It is not unusual for businesses to set up non-profit organizations for distributing charitable contributions. In fact the RDA is based on the same model as the foundations of East Chicago. Both are non-profit organizations funded by casino funds. The difference is the Foundations of East Chicago distributes their funds within the community the casino resides, while the RDA redistributes their funds throughout the region.
Additionally, you fail to acknowledge your own critical editorial entitled “Mayor Pabey, tear down that wall of secrecy,” 3/22/09, where you draw attention to the City’s lack of public disclosure of information, to the community or the press. Similarly, members of the Common Council have not received information, and have resorted to lawsuits.
This situation merits a comparison between the foundations of East Chicago and the city on how casino funds have been managed and spent. Contrary to the Foundation of East Chicago, which has held several open public meetings attended by more than 200 residents to plan out the use of their funds, the city has never held such a meeting. And upon review of receipts of city casino funds, attained through Indiana Access to Public Records Act (APRA) request by the Indiana State Gaming Commission, reveals many questionable expenditures including but not limited to a $20,000 legal settlement by the law department, headed by the Mayor’s cousin, Carmen Fernandez, to the Mayor’s other cousin William Pabey for pleading guilty of theft at the casino.
I would like to believe the NWI Time’s editorial staff is capable of coming to conclusions that are consistent and supported by evidence they present.
<End Notes>
45% of the casino was originally owned by a group of investors called Waterfront Entertainment and Development Inc. This group had 13 original investors, including Mayor Pabey. Article
Additionally, the State Board of Account’s 2005 Annual Financial Review of the City of East Chicago cites the Pabey Administration for spending $1.5 million in gaming funds without budget approval (page 48). (900k pdf) - View Document
“Upon review of expenditures from both funds, amounts were being spent prior to the budgets being approved. As of October 31 2005, $9,832,551 was spent from the Gaming Special Revenue Fund. At this date, the City has an appropriation in the amount of $5,000,000, and had prior year encumbrances totaling $3,292,088; thus, the City had spent $1,540,463 over what had been appropriated to that date.
Indiana Code 36-4-8-2 states in part:
“Money may be paid out of the city treasury only on warrant of the city fiscal officer. Unless a statue provides otherwise, the fiscal officer may draw a warrent against a fund of the city only if:
(1) an appropriation has been made for that purpose and the appropriation is not exhausted;…”
</End Notes>
Thomas East Chicago, Local