Tuesday, August 09, 2005

Casino's profits ascend, schools go bankrupt

The Times-Picayune reported today that, with a $48 million budget shortfall this year, the New Orleans public schools will need to cut 800 employees and increase the teacher-student ratio.

The shortfall represents about 12 percent of the $406 million school revenue projection for the year.

Meanwhile, as reported in last Thursday's Times-Picayune, 73 schools in Orleans Parish were recently given a failing grade - a 65 percent failure rate, compared to a statewide 11.5 percent failure rate among all 1,525 schools in Louisiana. This in a state ranked as having the 4th worst schools in the country. The evaluation was based on standardized state LEAP scores, Graduate Exit Exam and Iowa standardized test scores, attendance and dropout rates.

Citizens ought to wonder if anyone in city government sees the irony in the amount of the budget shortfall, $48 million? After whining about how it couldn't afford to pay its promised $100 million yearly payment to the state, Harrah's casino got the governor and state legislature to cut the payment in half. A couple of years after the casino opened, Harrah's hired lobbyists to quietly pressure legislators to reduce the payment. Consulting firm APCO brags on its web site that:

Harrah's New Orleans Casino was burdened with almost 50% taxation and severe restrictions on its ability to operate hotels and restaurants. Harrah's realized that without a reduction in taxes and an easing of restrictions it would be forced to close its doors. With only one year of tax payments guaranteed, the clock was ticking. Harrah's turned to APCO for help. APCO conducted research and quickly established that Harrah's was misunderstood and mistrusted by the community and had little or no support from the state legislature and local media. ...

APCO's campaign moved the debate from gaming to the importance of the jobs the casino created within the community. We created a grassroots education program to empower the casino's employees, their families and casino vendors to fight for local jobs. The core campaign message was '3,000 jobs for 3,000 families'. Most of those involved had never been politically active but, by the end of the campaign, they had sent over 30,000 letters and made more than 7,000 calls to elected officials, and hundreds had rallied at the state legislature. We also engaged allies able to gain the attention of, and influence, local elected officials.

Within twelve months, Harrah's got the reprise it needed when the state legislature passed a bill reducing the casino's tax rate by 50% and easing restrictions on hotels, restaurants and retail. Even politicians who had previously spoken out against the casino used the campaign's core message during the debate and committee stage, and it appeared in all the media coverage. The bill allowed the casino to keep its doors open and saved one of the state's largest employers.

Before Harrah's opened, New Orleans had no land-based casinos. The only casinos allowed were on river boats that could dock, but that had to periodically cruise. Whether because Louisiana voters didn't want a boom in casino building to spoil New Orleans' unique character, or because convicted Governor Edwin Edwards wanted to cut a sweet deal for the casino owners, Harrah's was given an exclusive charter to operate the only land-based casino at the foot of Canal Street, centrally located next to the Mississippi River, the French Quarter, and all the major luxury hotels.

Despite its claims of financial hardship a few years ago, Harrah's is pulling money out of people's pockets so fast that earlier this year it closed a $9 billion deal to buy Caesar's Entertainment, creating the largest casino operation in the world. In the meantime, Harrah's Entertainment is reporting record revenues:
Harrah's Entertainment Inc., owner of Harrah’s New Orleans Casino, today reported record second-quarter revenue of $1.47 billion, up 41.5 percent from the 2004 second quarter. ...

"We achieved our sixth consecutive quarter of record results and posted the highest same-store sales growth in nearly five years, both while completing the largest acquisition in gaming history," said Gary Loveman, Harrah's Entertainment's chairman, chief executive officer and president.

Well no duh! How can you not make money when you're legally picking peoples' pockets and offering no tangible product in return? It's always amazed me that people would want to throw away their money like that.

Now that Harrah's is posting skyrocketing revenues, and now that it's won permission to build a hotel and restaurant, the time is long overdue to renegotiate Harrah's contract, and either force it to comply with the minimum $100 payment to the state and city, or tell the operator to take a hike.

Finally, back to the schools problem, has anyone heard from our AWOL mayor, Ray Nagin? Ray-Ray, get some cojones man! You're supposed to be the can-do guy from the business world who was going to inject creative energy and performance-based professionalism into City Hall. What's the Ray-Ray plan to fix the bankrupt school system? What's the agenda, Ray-Ray? You can't plan on everyone getting casino jobs, and you can't have residents and tourists getting shot all over the city!


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