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Friday, December 04, 2009

No Ace In Hole For Indian Casinos; Cash Flow Crunch, Plus: NM Cities In Eye Of Money Storm 

New Mexico's gambling tribes are taking their first major financial hits since they came on the scene in force in the late 90's. We wouldn't be surprised to see one or two of them shutter their doors in the years ahead.

Pojoaque Pueblo's Buffalo Thunder Resort can't make payments on their bond debt and the same for the Mescalero Apache casino near Ruidoso. We took a look at the "net win" of the gambling tribes for the quarter ended September 30 of this year and compared it to the the September quarter in 2008. Net win is not the profit of the casino, but the amount bet on slot machines minus the amount paid out in cash and regulatory fees.

You can see why Isleta Pueblo laid off hundreds of employees at its resort south of ABQ this year. The net win on their slots has plummeted 15 percent over the past year, from $26,206,000 in last year's third quarter to $22,264,000 in this year's September quarter.

In order to survive, Isleta will rebrand itself as a Hard Rock Casino and Resort, a natinal chain that will now have a major financial role at Isleta.

The big boy on the block--Sandia Pueblo--has taken a 4 percent hit in slot revenue in the past year, going from $41,109,000 to $40,284,902. They are still the state's #1 Indian casino, but the growth is over.

The casino run by Santa Ana Pueblo near Bernalillo is also experiencing the new economic reality. The net win there plunged over 8 percent in the September quarter compared to last year, going from $18,792,000 to $17,221,000.

We did a little more figuring and compared the overall net win at all of New Mexico's Indian casinos year over year. We excluded the new Navajo Nation casino because it was not operating last year. The total net win for the September '08 quarter was $176,777,000 and for the '09 quarter it was down to $167 million. That's a decline of about 5.5 percent.

In the years ahead, the tribes will be looking to pay off debt from their expansions and holding on to the customers they have. Even a turn in the economy may not return them to their heyday. New social attitudes toward spending that seem to be rising out of this recession could permanently damper their growth.

THE SANTA FE SLUMP

They can't keep up with
the decline in tax revenue in Santa Fe, where tourism has been absolutely pounded by the Great Recession and government jobs are not falling from trees anymore. One month it looks as though they are pulling out, then comes another shoe dropping.

With a March
mayoral election looming, one wonders if the campaign will address the long-term economic needs of the City Different. Or are we going to hear that all we have to do is hang on and things will be back the way they were?

They won't.

The once in a lifetime credit bubble made possible all those tourist trips on high limit credit cards, many of the outlandishly priced home sales as well as the bubble in the art world.

Santa Fe is one of the nation's great small cities and can remain so, but it urgently needs to restructure its government and redefine its approach to tourism for the new era.

Sounds like a job for a mayor.

A DEEPER HOLE

New money projections from Santa Fe show the hole for the budget year that starts July 1, 2010 growing deeper. The Legislative Finance Committee estimate is now a $500 to $600 million shortfall. Then there's the $137 million the Legislature still has to come up with to balance the budget for the year we are now in and which ends June 30. They solved much of that issue last session, but not all of it. The projected shortfall of $500 million for next year includes the absence of $300 million in federal stimulus money. Will the deficit projection grow even more? That doesn't seem far-fetched.

RIO RANCHO PAINS

And it's no party in Rio Rancho either. A 30 year run of unbridled growth is done. Tax collections have hit the skids and like Santa Fe, it seems time to take a new look at how the city provides services. There's also a mayoral election in Rio Rancho in March. Let the debate begin.

Bringing it home to ABQ, here's an idea for Mayor Berry. Up in Denver, the mayor there asked for voluntary retirements to cut the city budget. Quite a few accepted and it meant fewer workers lost their jobs.

Hey, we're here to help.

Thanks for tuning in this week.

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