HAMMOND | The need to wean the city off its reliance of gaming revenue was central to Mayor Thomas McDermott Jr.'s State of the City address he gave Wednesday to a packed audience at Hammond City Hall.
McDermott said he expects casinos to one day be approved and built in downtown Chicago and the south side of Chicago.
"We need to be ready for it," said McDermott, explaining the city needs to prepare in the event its funding from Horseshoe Casino takes a drastic hit.
McDermott outlined the steps his administration has taken to close the city's $12 million budget gap, notably the approximately $4 million in increased revenue the city will receive from new water contracts with Chicago Heights and Calumet City — two of its largest Illinois customers.
Sweeping changes to the health care coverage offered by the city will save approximately $3 million a year, in part, by requiring employees to contribute more for their plans.
McDermott pledged in the address to push for the renewal of the College Bound program, which he began in his first term in office. However, the scholarship program currently is funded by gaming revenue, so McDermott said the city may explore using water sale proceeds to provide long-term funding past the program's original 10-year commitment.
The budget shortfall comes as the city continues to grapple with shrinking property tax revenue, and in 2012, an 88 percent property tax collection rate. Last year, the city received $24 million in property tax revenue, down 40 percent from when McDermott took office.
McDermott said his administration has saved money over the years, including a more than 30 percent reduction in the total manpower in the city.
McDermott said while the Hammond Water Works Department is at capacity in serving its current customers, it could bring on a smaller Illinois community such as Sauk Village.
McDermott told The Times during a preview of his address that the city may partner with East Chicago to buy water from the neighboring community to then sell on the open market. McDermott said East Chicago is working through its own capacity issues, but when those are addressed such an agreement would allow Hammond to expand its footprint in Illinois with both cities making a portion of the profit.
City Councilman Mark Kalwinski, D-1st, said McDermott didn't run away from what needs to be done in the city during his speech.
"I think with time as we learn how to work with water rates and how that benefits the city better we'll get more comfortable with weaning ourselves from the casino dollars," Kalwinski said, "that seem to be weaning themselves off the profit margins that used to exist."