The bad news for electronic pulltabs and Vikings stadium financing

MPR Photo/Jennifer Simonson

Minnesota finance officials released their February forecast, and it doesn’t look good for electronic pulltabs. Governor Mark Dayton acknowledged the shortfall yesterday and vowed to get the problem fixed, but It takes some close reading to get the basics.

Back in the salad days after the stadium bill passed in May, Minnesota was quietly expecting to have a $35 million dollar cushion in its stadium funding account by the end of the biennium — that’s above and beyond the debt service.

Electronic pulltabs debuted September 18th and had some strong initial numbers, doubling the per-day/per-device gross sales in the first days. Then came November:

nov. forecast

 

Minnesota Management and Budget dialed back its projections and said their expectation that ALL of the electronic pulltabs would be up and running by last October was, in hindsight, a little optimistic. So they changed the date to July, 2013.

And now, they’re conceding that isn’t going to happen either, and, rounding notwithstanding, they’ve basically written off a stadium funding reserve balance in their new February forecast:

feb forecast

That DOESN’T mean Minnesota can’t make its stadium mortgage payments, expected to be between $30 and $35 and $40 million in the first years of the payback. But part of the financing plan was to build in ample “coverage,” or reserve funds, to ease any bond-buyers worries about new gambling revenues paying them back.

Governor Mark Dayton talked a little about this issue in his response to the forecast, noting that the state was already pushing back the bond sales from this month to this summer.

“The one bad spot in today’s forecast was that proceeds from the new e-tabs gaming continues to fall below expectaions. I want to emphasize… that there is no financial problem at the present time. No bonds have yet been sold to finance the new stadium and none will be until August. MMB can control the timing of that, and future bond sales, to help manage that situation….It’s not an insurmountable problem, but it is a problem, and we will be working with Legislative leaders to solve it.”

But he also had a caveat for the solution. He didn’t think it necessary to “reopen” the stadium bill. “Not as far as I’m concerned,” Dayton said. “Even if we have to adjust the finance mechanism a bit, I don’t think that requires reopening the [stadium] bill.

He also said that the state was going to work on speeding up manufacturer and distributor approvals: “I think in year’s time we’ll see significant improvement, and I think we’ll be much closer to the projection.”