Cherokee passes COVID-adapted budget
In a narrow vote Sept. 3, the Cherokee Tribal Council approved a Fiscal Year 2021 budget that reflects the economic uncertainty caused by COVID-19.
The tribe derives about half its annual revenue from casino operations in Cherokee and Murphy, and the pandemic has resulted in closures and reduced capacity at both locations. While the FY 2020 budget was based on 80 percent of casino projections, the 2021 budget anticipates only 50 percent of the revenues realized last year.
Overall, the new budget is 19.5 percent smaller than last year’s budget, with $120 million less in gaming revenues. The office of Principal Chief Richard Sneed declined to release a copy of the budget to The Smoky Mountain News, stating that Cherokee law makes that document available to tribal members only. In FY 2019, the last year the tribe released the size of its budget, the total was $564.3 million.
The adopted budget will allow the tribe to retain all current employees at full pay and benefits, also providing for 2 percent merit increases as well as seniority bonuses for tenured employees. It includes enough money for all programs to start the year without cutting services, instead reducing spending on contracts and capital expenses as compared to previous years.
“In order to balance this budget at the 50 percent revenue mark, we had to redirect allocations from the investment funds to the general fund, as well as make those cuts and put in cost control measures to get to that point,” Blankenship told Tribal Council. “We do expect to outperform that point. We have outperformed that point to this juncture.”
Due to the pandemic, the casinos were closed completely from March 18 through May 12, the first closure in the tribe’s 23-year gaming history. They reopened May 13 on an invitation-only basis, and then to the general public on May 28, though only at 30 percent capacity.
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On Sept. 3, Sneed issued an executive order allowing the casinos to operate at 50 percent capacity, along with gyms and bowling alleys — such as the bowling alley contained within the Cherokee casino facility. However, due to social distancing protocols the casinos will not be able to take full advantage of this updated limit. Practically speaking, occupancy is still limited to 30 percent at the Cherokee location and 35 percent in Murphy, according to Regional Vice President of Marketing Brian Saunooke.
Despite these limitations, Blankenship told Council, the casinos performed at 65 percent or better compared to the prior year, one month actually beating prior year performance.
“We are performing at a much higher level than we anticipated performing,” said Blankenship. “However, we’re not certain how we will continue to perform into the first quarter, and that’s why we recommended that we delay the budget hearings until January to give that first quarter to realize actual returns.”
There could be a second wave of infections, or an especially large cluster could force the casino to shut down. The tribe is also waiting to see how the end of the $600 federal unemployment payments will impact visitation.
Only one COVID-19 cluster has been identified at the Cherokee facility thus far, announced July 20. That cluster has officially closed and included only five positive cases. It did not cause the casino to slow or halt operations. No clusters have been identified at the Murphy location.
In July, Tribal Council voted to postpone the budget hearings it typically holds leading up to adoption of the final budget. Instead, it decided to adopt a bare-bones budget and hold hearings beginning in January, when it hopes to have a clearer picture of the tribe’s finances over the coming year.
“All revenue being added back to the budget would come to this council in the form of a request,” said Blankenship. “It actually gives you a better idea of how they’re performing and how they’re using those revenues and what those expenses are, because we can move to a truly performance-based model.”
The budget’s passage was narrow, with some council members wishing to table the vote. Wolfetown Representative Bo Crowe advocated for adopting a continuing budget and waiting to pass a true 2021 budget in January.
Crowe moved to table the vote, with a second from Big Cove Representative Richard French. Joining Crowe and French in favor of the move were Painttown Representatives Tommye Saunooke and Dike Sneed. Opposed were Chairman Adam Wachacha, Vice Chairman David Wolfe, Yellowhill Representative Tom Wahnetah and Birdtown Representatives Boyd Owl and Albert Rose. Chelsea Saunooke, Bucky Brown and Perry Shell were absent from the vote.
The move to table failed, and then Wachacha, Wolfe, Rose, Wahnetah and Owle prevailed on the move to pass. The passage will become official upon ratification from Sneed.
