Turning Stone liquor deal means tax windfall

By BRYON ACKERMAN
Observer-Dispatch
Posted May 22, 2010

UTICA — Love it or hate it, the deal for alcohol service at the Turning Stone Resort and Casino could result in more money in your pockets.

The agreement, which was approved by the state Liquor Authority between the Oneida Indian Nation and CD Food and Beverage, would result in the collection of sales taxes from all food and beverage purchases at the resort and the 2 percent county bed tax on the 704 rooms there. Those funds could provide tax relief for Oneida County residents, officials said.

Estimated revenues from collecting those taxes:

- $450,000 from the bed tax – Oneida County Executive Anthony estimates this figure based on the county's total bed tax collection being in that range in recent years and Turning Stone having about as many rooms as the rest of the county combined. These funds would help support local tourism efforts.
- $4 million from the sales tax – CD Food and Beverage and Oneidas attorneys have estimated this will be the total amount of sales tax benefit per year from the agreement. If the estimate is accurate, about $1.8 million would go to the state and $2.2 million to the county to also be shared with the municipalities.

Oneida County would be left with more than $1 million in new sales tax revenue, which depending on other finances, could decrease a potential property tax increase or be put into the county's general reserve fund, Picente said.

"This is a new revenue stream that was not tapped before," he said. "It can only help us."

With the agreement kicking in at the start of the week, alcohol service could begin as soon as Tuesday. It was arranged between the owners of The Beeches, who created CD Food and Beverage, and the Oneidas.

But not everyone thinks the tax collection factor makes the deal a good one.

State Assemblyman David Townsend, R-Sylvan Beach, compared it to benefiting from robbing a bank.

Townsend questioned the legality of the deal and of efforts Turning Stone officials made by telling companies they work with recently that they risked losing business with the Oneidas if they didn't speak in favor of the deal at a May 6 state hearing.

"Now, you're going to derive a profit from it?" Townsend said. "These are the fruits of ill-gotten gains."


Weighing the impact

When the Liquor Authority approved the alcohol deal, the collection of taxes played a role in the decision, agency spokesman William Crowley said.

"Every application we look at, we approve if it's in the public interest," Crowley said. "That was one of the factors that tilted it towards approval."

The state's ability to have regulation and oversight over the process, send inspectors and do everything it does for all other vendors also was important in the decision, he said.

But attorney David Vickers of the Upstate Citizens for Equality group said he believes the liquor license and gambling at Turning Stone are illegal, and that the deal will hurt other businesses in the area because it will make it harder to compete. Late last week, the operators of Vernon Downs addressed that question, saying they were disappointed with the state Liquor Authority decision.

"Our business this year is up substantially, and we are hopeful that the decision by the Liquor Authority will not negative impact Vernon Downs," said a statement from the majority owners and management of American Racing-Vernon Downs Inc.

Vickers, a Republican candidate in the 111th District state Assembly race, represents local tavern associations and residents in a lawsuit filed in November over alcohol catering permits issued at the resort.

"Taxes would not be an issue if the Oneidas were held accountable to all New York state laws and regulations as they should be," he said.


Current sales tax

Sales taxes are already collected on alcohol sales made at Turning Stone through daily licenses with The Beeches, officials have said, but the total tax collected through that arrangement could not be learned.

The Liquor Authority does not track that information, Crowley said, and the state Department of Taxation and Finance cannot release information a vendor provided on its tax return, department spokesman Brad Maione said.

Nation spokesman Mark Emery issued an e-mailed statement in response to several questions about tax collection.

"As a sovereign Indian nation, the Oneida Indian Nation is not covered by state laws and taxing regulations," Emery said. "The question of taxes on alcohol is up to CD Food and Beverage, a New York state corporation."

The company is named after Christopher Destito, the late husband of state Assemblywoman RoAnn Destito, D-Rome.

Managing the company are President Frank Destito, Vice President Dominick Destito and secretary/treasurer Orlando Destito. RoAnn Destito said last week she is not involved in CD Food & Beverage in any way and would not profit from its activities.

Questions e-mailed to Orlando Destito were then responded to by Emery, who said the amount of sales tax collected through alcohol sales is "confidential, proprietary information."


Using the bed tax

The additional bed tax revenue – estimated at $450,000 – would go to the Oneida County Convention and Visitors Bureau as directed by the legislation that created the bed tax, Picente said.

That money can help improve overall tourism efforts for the area and can now more directly connect Turning Stone into that marketing, he said.

Because of the extra revenue, Picente also is looking into the possibility of using a small percentage of the total bed tax funds to distribute grants to cultural/tourism organizations such as Utica Monday Nite to try to reduce the burden on the county and municipalities for assisting such efforts.

County Board of Legislators Majority Leader David Wood, R-Rome, said he supports those ideas and believes the funding will be particularly beneficial when promoting the region's golf courses along with Turning Stone's and increasing the area the marketing goes to.


Using the sales tax

As far as the new sales tax revenue, it could be used to deal with other cost increases, lessen the property tax burden or balance reserve funds, Wood said.

Wood and a couple other legislators are looking into whether the sales tax portion for the municipalities could be distributed more heavily to the Vernona-Verona area because of the casino's location there, he said.

"That's only fair," he said.

Board Minority Leader Patricia Hudak, D-Rome, could not be reached for comment.

County Comptroller Joseph Timpano said he can't vouch for the sales tax estimates, but the money could be used to help balance the 2010 budget. If there's extra, it could go into reserve funds, he said.

"Any extra revenue would help us in these economic times," Timpano said.

Instead of setting the revenue aside for any other projects, Picente said it should be used to address the overall budget to help keep down property taxes or boost reserve funds.

As the amount of new revenue coming in is being watched, Picente said he will be remembering something his father told him when he got his first job: Don't spend the paycheck before you get it.