What does the largest city in western Massachusetts do with the millions of dollars it gets every year from its single-largest taxpayer? It was a question City Councilors in Springfield asked at a joint committee meeting Tuesday.
The money Springfield receives from the MGM casino helps the city pay for important services and projects, but is not enough to lower people’s tax bills, according to T.J. Plante, Springfield’s Chief Administration and Finance Officer.
"It helps a plug a structural deficit we've had in our budget for years," Plante said. "It has not solved all out problems, but has made it easier to invest in all sorts of services that the city needs."
He presented a detailed report Tuesday night in City Hall about MGM’s financial commitments that are spelled out in the host community agreement that was negotiated in 2014 before the casino was built. The report was discussed at a joint meeting of the City Council Finance and Casino Oversight Committees.
City Councilor Trayce Whitfield, newly-appointed chair of the Finance Committee, said one of the top questions she hears from constituents is “Where is the MGM money going?”
"One of the most popular question is, 'Our tax revenue is going up, what is happening with the MGM money that was promised is going to reduce the tax bill overall?', Whitfield said.
Plante said the belief that casino revenues would be used to lower people’s tax bills is erroneous.
He said no one every promised lower taxes as a result of the casino. "I've never heard it and I never said it," Plante said.
Springfield receives $17.6 million annually from MGM as a negotiated property tax payment. The money goes into the general fund and is used for all city expenses. The city took $13 million in pre-payments while the casino was being constructed and that is being paid back over a seven-year period.
In the current fiscal year, MGM’s annual tax payment to Springfield is $13.9 million.
Chief City Assessor Richard Allen said the agreement with MGM guarantees the city a set amount of money every year that is not subject to changes in property valuations and tax rates.
"Just to be clear, it was not a break, it was not a discount," said Allen, who added that MGM is "locked in to that as a gauranteed payment."
The annual payment from MGM is just 2 percent of the city’s total tax levy.
MGM also pays $2.5 million to a mitigation fund that is used to pay for public safety and other expenses the city has as a result of hosting a casino.
Another $2.5 million is paid by MGM to a community development fund that is to go toward the “betterment” of the city.
Plante said there is $4.6 million in the community development fund that is unspent because the administration and the City Council have yet to come up with a policy for how to disperse the money.
Unlike the city which gets a guaranteed sum from MGM, Massachusetts receives only the 25 percent tax on the casino’s gross gaming revenue.
Since opening in August 2018, the casino has taken in far less revenue than was projected.