Looking to shrink a structural budget deficit, the Streator City Council reached a consensus on Tuesday to raise annual video gambling terminal fees to $250 per terminal.
City Manager David Plyman projects a budget surplus of $92,342 in the general fund for 2022, but he said federal COVID-19 relief funds and money acquired from drug enforcement have propped up the budget.
“These funding sources should not be relied on to pay for continuing expenses,” Plyman said, noting the seemingly one-time COVID-19 funds will have stipulations in how the city can spend it.
As of last month, there were 158 terminals operating in the city at 30 different establishments, generating a net income of $6,086,473.53 from February to November, according to the Illinois Gaming Board. Video gambling was shut down by the state at the start of the year as a precaution during the pandemic.
The state previously capped the annual fee a city could charge gambling establishments at $25 per terminal, but recently changed the maximum to $250 per terminal. The increase will generate $35,550 more revenue for the city’s general fund.
Councilwoman Tara Bedei said the increase in gambling terminal fees is a way to generate revenue without increasing property taxes. The city proposed a tax levy that figures to reduce the city’s rate, leading to roughly $7.10 less tax on a $100,000 home.
She also figured five business days as the average time it would take for establishments to earn the income to pay the fees.
“For most businesses, it will be less than a week,” she said.
Bedei said the establishments typically share the terminal fee with the machine distributor.
“I don’t think it will stop anyone from operating their machines,” Councilman Matt McMullen said.
Plyman said the fees are collected annually in April.
To go along with the newly-proposed fees, the city collected $304,323.96 in its share of video gambling revenue from February to November from the taxes collected on the gaming profits. The state took in nearly $1.8 million in its share from Streator.
No representatives of the video gambling community were present at Tuesday’s meeting. The City Council will need to approve an ordinance at a future meeting to finalize the fees.