Gallup’s revenue is up; but will it last?

Copyright © 2008
Gallup Independent
By Bill Donovan
Staff writer

GALLUP — So far, city revenue is showing some good news with gross receipts up $706,776 over last year.

In the first six months of the year, the city has received almost $10.3 million, as compared to the almost $9.6 million it received for the first six months of last year.

That’s the highest amount the city has received by far for the first six months, and while city officials should be rejoicing, they know that the next two months will tell whether the city winds up in the red or the black for the year.

The revenue the city receives for its share of the gross receipts taxes is always two months behind, so the money it received for December is for October sales. That was before the recent downturn in the economy and more importantly, that was before the Fire Rock Casino opened.

There are indications that the city may be seeing a slowdown in revenue.

After four months of record-breaking revenue, the last two months have seen small declines. The revenue for July, August, September and October were all up more than $200,000 over the year before, but the November and December take were both down more than $75,000, which could indicate that the Gallup merchants in September and October were beginning to feel the first signs of the recession.

City Manager Gerald Herrera said the city will know a lot more about the local area’s economy in late February. By then, the city will have the figures for November and December and be able to see how Christmas sales compared to years past and what affect the first month of operation for the Navajo casino has had on the community.

National figures have shown that Christmas sales were down at least 8 percent over last year, and there are no indications that Gallup will be spared from a similar fate.

As for the Navajo casino, it took in $1.2 million on its first day of operation and more than $2.2 million on its second day. Since then, when the weather was good, it has attracted between 4,000 and 5,000 people a day and is still grossing at least several hundred thousand dollars a day.

However, these figures are a little misleading, said Bob Winter, the tribe’s gaming czar. This is the money brought in and does not take into consideration money that was paid out in winnings. The net for the day is probably only between 15 and 20 percent of the gross.

But even then that means the casino is collecting at least a couple of hundred thousand dollars a day from its customers, most of whom are Native American.

City officials are trying to determine just how much of that money would have been spent with Gallup merchants who pay sales taxes. Since the casino pays no sales taxes — it is on tribal land — money spent there and not in Gallup stores that are taxable, means less revenue for the city coffers.

But Herrera also points out that the casino may have a positive effect on city revenue since it is bringing in thousands of reservation residents into town who go to local restaurants and they gas up at local gas stations. He said he has already heard reports that gasoline station dealers on the eastern side of town are seeing sharp increases in their business.

Another thing that city officials will also be looking at, he said, is city utility payments.

If more people start getting behind in their payments, this would be another indication whether the economic downturn or the casino are having an effect on city revenues.