Gambling Proposed To Help Generate Funds for Chicago Schools

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Mayor Richard M. Daley of Chicago, searching for ways to raise money for the cash-strapped city schools without increasing taxes, last week proposed building an $800 million entertainment complex that would include gambling boats on the Chicago River.

The Mayor's chief of staff, Gery Chico, outlined the proposal before the House Judiciary Committee in Springfield.

Mr. Daley and Gov. Jim Edgar, who have disagreed over gambling in the past, have begun publicly discussing it as a way to generate money for the Chicago schools, which face a $415 million deficit. (See Education Week, May 26, 1993.)

Under the Mayor's proposal, the Chicago school district would receive $71 million a year from the admissions fees that would be charged to riverboat gamblers.

The state of Illinois would receive about $264 million in revenue from the complex, Mr. Chico told the committee, including $182 million from the gaming tax that would go into the education-assistance fund and be redistributed to school districts throughout the state.

Governor Edgar, who in the past had rejected a more ambitious proposal by Mayor Daley for a $2 billion hotel, casino, and entertainment complex in Chicago, has signaled his willingness to compromise on the gambling issue to stave off the possibility that Chicago's schools will not be able to open in September.

'Political Realities'

A spokesman for the Governor said last week that he is in favor of bringing riverboat gambling to Chicago, but would not comment specifically on the Mayor's proposal until it is drafted into legislation.

Illinois politicians and Mayor Daley are expected to haggle over the deal until the end of this month, when a conference-committee report will be drafted wrapping up the legislative session.

Even if some form of riverboat gambling is agreed upon for Chicago, the school system still would need an infusion of money to tide it over until the riverboats generate revenue.

Diana Nelson, the president of Leadership for Quality Education, a business-oriented reform-advocacy group in Chicago, said the idea of relying on gambling revenue to finance the city schools was "not in the best interest of children.''

"It does not provide the long-term stability that we need for the system,'' she said last week. "But we can't be Pollyanna-ish either. We have to be aware of the political realities.''

The reality is that Mayor Daley opposes a property-tax increase to pay for the schools, while the Governor has refused to consider raising the state income tax.

Under the scenario outlined last week by Mr. Chico, an entertainment district of up to 150 acres would be created on the Chicago River. It would include up to five riverboats with 6,000 gaming positions and an entertainment center that would offer "virtual reality'' movie-type attractions similar to those at Epcot Center and Universal Studios in Florida.

Mr. Daley is calling for an increase in the state gaming tax from 20 percent to 25 percent. The city would receive 25 percent of the revenue generated from the tax, while the state would get the rest.

Chicago would reap approximately $160 million from the entertainment complex, according to the Mayor's proposal. Half of the revenues from a $12 admission fee for the riverboats would go to the Chicago schools, totaling about $71 million, Mr. Chico testified.

Riverboats based in other Illinois towns have been "the equivalent of a gold rush,'' he said, noting that the boats in Joliet and Alton are making far more money than initial estimates had predicted.

The Mayor's proposal, with its emphasis on the economic benefits to the entire state, was clearly crafted to minimize the appearance of a bailout for the Chicago school district, observers said.

In the meantime, the school system needs to close its budget gap by Aug. 1 in order to open schools in September. Martin Koldyke, the influential chairman of the School Finance Authority, which oversees the school budget, has proposed issuing state general-obligation bonds to provide money for Chicago and other Illinois districts with financial woes.

But using gambling money as a revenue source might pose problems, Ms. Nelson said.

While the financial issues are being debated, bills that would change union work rules and make adjustments to the Chicago school-reform law are on hold.

Vol. 12, Issue 37

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