WORKSHOP ITEM - Joe Huss, Finance Director
Title
PRIORITIZING THE 2020 CHARITABLE GAMBLING FUND BUDGET
Background
Staff is requesting that the City Council establish a prioritization process for 2020 payments being made out of the City’s Charitable Gambling Fund.
The city’s charitable gambling fund was established in 1993 to account for the proceeds of a 10 percent contribution that charitable gambling organizations operating within Blaine are required to submit to the city (Code Section 22-384). Organizations participating in charitable gambling are required to submit 10 percent of their net profits to the city within 15 days of the end of a calendar quarter.
For 2020, the City Council appropriated $150,300 in charitable gambling proceeds to the following organizations
• Alexandra House - $50,000
• Salvation Army Food Shelf - $9,350
• Centennial Food Shelf - $9,350
• Hope for the Community Food Shelf - $9,350
• Sr. High School graduation activities - $2,250 ($750/each)
• Civil Air Patrol - $2,500
• SBM Fire (July 4 fireworks) - $35,000
• Beyond the Yellow Ribbon - $2,500
• Stepping Stone - $10,000
• Family Promise - $10,000
• Hope 4 Youth - $10,000
Budgeted revenues for 2020 are $150,950 and the fund ended 2019 with roughly $94,000 in reserves.
Typically, the city begins paying receiving organizations in the second quarter of the year, funding those payments with reserves on hand as well as first-quarter revenue. Payments are made only up to the amount of funds on hand in order to maintain the fund’s solvency and prevent a cash deficit. Typically, the payments sent in the April-May timeframe will fund the food shelves, the high schools, and the shelter organizations. Payments to the remaining groups are sent in July after the second quarter charitable proceeds are received.
The outbreak of the Covid-19 pandemic and the impact it has had on the economy has placed great stress on local food shelves, and the decision was made to fund the food shelves with reserves on hand rather than wait for first quarter proceeds. The decision was also made to fully fund the Alexandra House, the only sheltering organization located within Blaine and the organization that annually receives the largest donation of charitable funds. Sufficient reserves were on hand to make these payments. Roughly $16,000 remain in reserves.
With the March 17 closure of bars and restaurants, staff is anticipating a reduction in first quarter charitable gambling proceeds and an even steeper decline in second quarter receipts as the closure order has now been extended to May 4.
The issue before the Council is to prioritize the remainder of the payments. First quarter charitable gambling receipts have averaged $38,000 over the last two years. A reasonable, conservative estimate would be that first quarter proceeds would be half of the two-year average, or $19,000. If that is the case there would be sufficient funds on hand - $35,000 - to pay the remaining three shelter organizations their full appropriation ($10,000 each; $30,000 total). There would still be sufficient funds for Council to approve the funding of the three high school’s graduation events. An alternative to this plan would be to remit to the shelters half of their 2020 appropriation ($5,000) immediately with the remainder paid after collection of any first half proceeds.
The remaining organizations would be funded to the extent funds become available and the events for which the funding was approved take place as scheduled.
Recommendation
Staff requests that Council discuss and approve a prioritized schedule for charitable gambling funds for 2020 at the April 6 Workshop.