The Graton Resort and Casino has paid Rohnert Park about $3 million to cover costs the city has absorbed since the gambling palace opened on 254 acres just west of town.

City officials Tuesday discussed the first report on casino impact funds since the lavish Nov. 5 grand opening. Funds from the casino are kept separate from the general fund, which officials said Tuesday is climbing out of the red faster than expected.

The general fund pays for essential city services such as public safety, streets and parks.

Halfway through the fiscal year, the city still faces a more than $500,000 deficit, but that's down from the $1.4 million hole the city anticipated at the beginning of the year.

The city was able to make up the difference through a combination of higher-than-expected revenues from sales and hotel tax and savings due to unfilled positions.

Just three years ago, Rohnert Park was staring down a $6 million deficit with city leaders talking about bankruptcy. Now, officials say their belt-tightening measures are paying off.

"We're starting to see some real rewards as we exercise that fiscal conservatism," said councilman Jake Mackenzie.

By the end of the fiscal year in June, the city expects to spend $26 million, which is $595,000 more than it will collect in taxes and other revenues.

"We're not out of the woods in terms of our budget deficit," said City Manager Darrin Jenkins.

The $3 million payment is the result of an agreement between the city and the Federated Indians of Graton Rancheria, which owns the casino. The money is used to offset the impact of the casino and not to pay down the deficit.

"This is to make up for lost revenue," said Mayor Joe Callinan. "Don't take this as we have more money."

The city so far has spent the money on two traffic officers, traffic engineering experts, planning consultants, traffic signs and sprucing up the entrance to the city, among other expenses.

In June, the major provisions of the tribe's memorandum of understanding with the city will kick in. The casino will pay the city $251 million over 20 years, according to an amended agreement the city approved in March.

You can reach Staff Writer Matt Brown at 521-5206 or