No New Jackpot Tax at Potawatomi

Alderman Mark Borkowski thought he had a relatively straightforward idea to raise more revenue for the city: a 1% tax on all casino jackpots in excess of $1,200.

“On the surface, it sounded rather innocuous, in that you could just go up and lobby the legislators and see if you can get that,” said Borkowski on Monday about receiving state approval.

But Dominic Ortiz, the new Potawatomi Hotel & Casino CEO and general manager, talked him out of it. Borkowski is killing his own proposal.

“He didn’t twist my arm. I thought it was the proper thing to do,” said Borkowski to members of the Judiciary & Legislation Committee.

Ortiz explained to the alderman that Waukegan, IL would soon have a new casino. Kenosha could also eventually land a casino.

“The long and short, as he stated to me, Potawatomi is going to have to do everything they can, and rightfully so, to be competitive,” said the alderman.

Borkowski told his colleagues that the conversation was, however, beneficial. He said he made it clear to Ortiz that the city faces serious fiscal issues and is limited in its revenue sources.

To satisfy a legal obligation to fully fund its pension, the city faces the need to raise at least $50 million annually starting in 2023. Without it, Milwaukee could need to lay off 24% of its workforce by 2026.

Ortiz, Borkowski said, is new to Wisconsin and wasn’t fully aware of the situation.

“He has some thoughts and ideas about what he may do and I said on behalf of the city we would be grateful for anything,” said Borkowski, while declining to get into specifics. “We had a great conversation.”

The alderman first floated the idea in early April, but Ald. Michael Murphy requested the proposal to lobby the state be held so that Potawatomi representatives could weigh in. The casino, at the time, declined to comment to Urban Milwaukee on its stance.

On Monday, Borkowski drew praise from Murphy and Ald. Ashanti Hamilton for continuing to look for new revenue streams.

“We at the city need to look under every rock that is possible to find additional revenue for us,” said Borkowski.

Just across the street, the alderman has turned over another rock.

Last Thursday at a meeting of the Public Safety & Health Committee, Borkowski floated the idea of selling excess equipment from the Department of Public Works yard across from the casino to raise money to upgrade street lights. The alderman said the idea came to him after getting a tour of the facility, 1540 W. Canal St. “My eyes got as big as saucers when I saw all the stuff in the yard,” he said.

Interim Commissioner Jerrel Kruschke said it is something DPW would explore, especially since it could use the space. But he wasn’t sure what it could yield. He noted that DPW needs a number of spare parts and regularly harvests usable items from larger pieces, like street lights, that are damaged.

An agreement with Potawatomi has the city set to receive $5.75 million in 2022, part of an annual payment in lieu of taxes from the casino to the city. Potawatomi also pays property taxes on its non-casino properties. The hotel complex alone yields $2.5 million in property tax revenue and is the fourth most valuable property in the city.

Under federal law, Potawatomi already reports winnings at or above $1,200 as income to the state and federal government. In 2020, the casino reported an average of 220 taxable jackpots occurred daily.

Aldermanic Influence, Even After Leaving Office

The jackpot tax is an example of how many of the city’s former council members continue to be engaged in city politics.

Borkowski credited the idea for the jackp0t tax to his friend and former alderman Jeff Pawlinski. The meeting that killed the idea was organized by former alderman Michael D’Amato, now a lobbyist.