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Gambling tax: Reduction is a safe bet | Mirror editorial
In today's economy, sometimes less is more.
With the recent closure of PJ Pockets Casino, Federal Way stands to lose a significant chunk of revenue through the gambling tax. The city takes 20 percent of the casino's gross gambling receipts — the maximum allowed by the state gambling commission for cardrooms. The average tax on similar cardrooms in Washington state is about 10 percent.
The high tax and the slow economy contributed to the casino's closure. The casino also laid off 85 employees.
City manager Brian Wilson will propose that the Federal Way City Council reduce the city's gambling tax on cardrooms from 20 percent to 10 percent. His proposal will include reducing the tax on pull-tabs from 5 percent to 4 percent.
The proposal is worth passing.
In 2010, the city expected to receive about $1.1 million in gambling tax revenue from 18 establishments. The reduction of the gambling tax obviously means less money for Federal Way, but less money is still better than no money.
Perhaps the casino's financial problems could have been alleviated long ago if the owners had simply asked for help. With a lower gambling tax, PJ Pockets could save a few hundred thousand dollars per year. Casino co-owner Steve Griffiths sounded optimistic after learning about the city manager's proposal. The possibility of the casino reopening is back on the table. Although hindsight is always 20/20, the casino could have created more luck by showing the city its financial cards instead of folding them.
In the business community, a mixed perception exists as to whether the city makes it easy to do business here. Situations like this one, and the city's prompt and precise actions, go a long way toward answering this perception. The Mirror cannot speak for every business, and for that matter, the city cannot read the minds of business owners in trouble. This further illustrates the value of communication: Once the issue was brought to the city manager's attention, the search began for a solution. However, communication only works if it has taken place. The city council and city manager, along with a future elected mayor, are here to help you. Utilize them.