CLT UPDATE
Thursday, October 11, 2007
Resort Casinos in Massachusetts?
Governor Deval Patrick will file a casino gambling
bill today that gives him control of a seven-member gaming authority
that would auction off licenses and regulate the casinos.
The bill, which puts two elected officials on the new panel, is already
drawing fire....
The money collected from the casino operators would go into seven trust
funds. Among them would be . . . $200 million annually toward property
tax credits for about a million homeowners . . .
The Boston Globe
Thursday, October 11, 2007
In bill, Patrick controls casino panel
Patrick administration officials who offered details of the
proposal yesterday said the bill provides previously undisclosed mechanisms for
increasing funding for both transportation and for municipal services in cities
and towns through the state lottery....
The legislation also guarantees that cities and towns will receive a 3 percent
annual boost in aid from the state lottery, expected to suffer losses of up to 8
percent from the introduction of casinos.
Previously, Patrick had said only that the lottery would be reimbursed any
losses due to casinos, but sources said the legislation ensures aid to cities
and towns increases every year. Currently, the lottery provides about $900
million a year for municipal services statewide.
The Boston Herald
Thursday, October 11, 2007
Casino proposal ready to roll
Still, the rebate plan doesn't address the need for the state
to find a rational way to share revenues with cities and towns at a time when
property taxes are rising and services are declining. Patrick promised in his
campaign that he would "cut the property tax by reinvesting in cities and
towns." That elusive goal hasn't been brought any closer as a result of his
casino bill.
A Boston Globe editorial
Thursday, October 11, 2007
Casinos: raising the stakes
Chip Ford's CLT Commentary
This "resort casino" issue is a tough one. CLT
at the moment has no position and is seeking one. Even among our
four-person staff opinions vary. One thing we do agree on is that
whatever state revenue is generated by Massachusetts resort casinos will
likely have little impact on everyone's property taxes.
See yesterday's CLT new release
The governor's proposal seems like more
pie-in-the-sky. He keeps coming up with these things without
getting them anywhere, so we don't expect this to be any different.
His convoluted formula of alleged "property tax relief" -- his latest --
is nothing more that an income tax credit. That aside, below is
what we at CLT are wrestling with, from different perspectives.
In the next membership mailing we will include a poll
asking how you feel about this issue. Please return it. You
should receive it sometime in November.
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Chip Ford |
I can't see any reason why Massachusetts
doesn't have casinos, since the demand is obviously there: e.g.,
the Mohegan Sun and Foxwood casinos in Connecticut, just over
our state's border. Why not attempt to collect some of the
revenue from Bay State residents now collected by the Nutmeg
State, why not shorten their drive to a casino (a public safety
and ecological issue as well) by putting a few in Massachusetts?
Of course Massachusetts politicians will
squander the additional revenue. They always do. Of course
they'll expand spending and the state budget. They always do
that too. But the generated revenue will be voluntary, and it
will be additional. The pols won't need to hit us taxpayers up
again as soon.
Just don't wait to see anything reformed if
more satchels of cash are dropped on the bargaining table to
keep the gravy train running. This is but another stop-gap
measure, a finger in the dike.
But why not indulge, instead of letting a
bordering state absorb it all?
Chip Ford --
Director of Operations, CLT
Casino gambling will cause more problems than
it solves. The increased revenue to the state will only fuel
overspending problems created by politicians whenever they get
extra money. This new revenue will almost certainly not go to
"property tax relief" or eliminate the need for new taxes. Just
look at New Jersey and Connecticut, states where casinos rake in
billions -- yet the two are among the most heavily taxed states
in the country. Crime increases dramatically in the area around
casinos. That will lead to another unaffordable problem: more
police with paid details, high health insurance premiums and
costly pensions. Finally, if you think Bay State politicians and
powers-to-be can responsibly handle an enterprise that involves
billions of dollars, I've got two words for you: Big Dig.
Chip Faulkner --
Associate Director, CLT
Chip is absolutely right. I agree with both
of them!
As a libertarian, I think anyone who wants to
open a legal business on land he owns should be able to do so.
Gambling is obviously legal here; as someone said, the
commonwealth is just a bookie with a lottery. But no one is
advocating having the state get out of the way of private sector
gambling.
One CLT member, Frank Conte, pointed out that
pro-casino politicians who use Chip Ford's argument about
Massachusetts citizens going to Connecticut, don't worry
overmuch about Massachusetts citizens shopping in New Hampshire.
If they were consistent, they'd want to allow casinos AND repeal
the sales tax.
I'm not sure public safety is improved with
casinos. People who are drinking, who might stay overnight in
Connecticut now, might try to drive home if the casino was
closer in Massachusetts.
I think of Nevada, where gambling revenues
fund much of state government, there is no state income tax, and
the total tax burden is relatively low. But Chip Faulkner is
probably right, we'd be more likely to emulate New Jersey. If I
recall, when Nevada lost revenues after 9/11, it instituted a
"temporary" tax -- which it actually dropped when gambling
picked up again! That wouldn't happen here.
I look forward to our poll, to learn what the
rest of you think. My only proposal is that this issue should be
on the ballot for Massachusetts voters to decide. The
Legislature can put it on as an advisory question without having
to collect signatures, and that's what it should do.
Barbara Anderson --
Executive Director, CLT
The Boston Globe
Thursday, October 11, 2007
In bill, Patrick controls casino panel
By Andrea Estes
Governor Deval Patrick will file a casino gambling bill today that gives
him control of a seven-member gaming authority that would auction off
licenses and regulate the casinos.
The bill, which puts two elected officials on the new panel, is already
drawing fire.
Under the proposal, the state treasurer and the state auditor would sit
on the board of what would be called the Massachusetts Gaming Control
Authority. The five remaining members would be appointed by the
governor.
Treasurer Timothy P. Cahill and Auditor Joseph DeNucci said yesterday
they were never asked by Patrick's administration what they thought of
their potential involvement in the authority. While DeNucci welcomed the
opportunity to serve, saying it is a good idea to have the state auditor
overseeing casinos, Cahill disapproved of the makeup of the proposed
panel.
"I don't think it's a good business model to have elected officials as
part of the oversight process," Cahill said. "This is the most lucrative
license anyone will ever bestow on anyone in Massachusetts."
In addition, Cahill, who is chairman of the State Lottery Commission,
said it would not be appropriate for a lottery official to regulate
casinos because slot machines and table games would compete with the
lottery.
"Having a foot in the two doors doesn't make sense," Cahill said. "There
could be a conflict, and I want to see the lottery protected."
The bill fleshes out in exhaustive detail a proposal for three resort
casinos that Patrick outlined on Sept. 17. A summary of the bill's major
provisions provided by an administration source who helped craft the
bill did not contain any major surprises, but it provided an outline of
the issues that will be hotly debated as the Legislature takes up the
measure, which House Speaker Salvatore DiMasi, a gambling opponent, has
said will not get a vote in the House until next year.
The legislation would legalize gambling activity that is illegal now and
spells out three separate regions of the state -- metropolitan Boston
and the North Shore, Southeastern Massachusetts, and Western
Massachusetts -- where casinos could be built.
Patrick estimates that three casinos would produce $2 billion in
economic activity, including $400 million a year for state coffers, and
20,000 jobs. Bidding by casino developers for the three 10-year licenses
would produce a combined $600 million to $900 million for the state,
according to Patrick's projections.
How the industry would be controlled has been a major concern for
lawmakers, some of whom see the introduction of casinos as fraught with
the potential for corruption. An administration official who helped
draft the bill suggested that the governor's proposed Gaming Control
Authority would be free of political influence.
"It is an independent authority that will sit outside the executive
branch and not be directly answerable to any of the secretaries or the
governor," said the official.
The authority would have broad powers to set up the license auction
process and evaluate and choose the winning bidders. After the casinos
begin operating, the authority would collect and distribute the state's
share of gambling proceeds, monitor the conduct of casino operators, and
perform annual audits. The authority's operating budget would be funded
through a fee on each of a casino's slot machines or gaming tables.
Patrick has said that he wants Massachusetts casinos to operate under
the most transparent and stringent regulatory system, to avoid any taint
of criminal behavior or corruption. To that end, his proposed bill would
provide criminal penalties for gambling related offenses.
The bill contains strict new ethics rules that bar employees or board
members of the Massachusetts Gaming Control Authority from working for a
gaming company for three years before and three years after their
service with the authority. Employees of the executive branch also would
be prohibited from working for the authority or a casino for three years
after they leave state government.
Prospective bidders would be required to pay $350,000 to have their
casino license applications reviewed. In addition, for their application
even to be considered, bidders would have to offer the state a minimum
licensing fee of $200 million and agree to pay at least 27 percent of
their gross annual revenues to the state, or $100 million a year,
whichever is larger.
The highest bidder will not necessarily be awarded a license, the bill
says. The authority will score proposals by applying about a dozen
criteria, including the number of jobs that will be created, the
infrastructure improvements, the use of local and small businesses for
goods and service, and the level of investment. The bidder who provides
"the highest and best value" will win the license, the bill says.
"Because this is predicated on economic development and job creation,
the eligibility criteria speak to the level of investment and the number
of jobs that will be created," said an administration official who
worked on the bill.
As expected, the bill also contains a provision to provide preferential
treatment for a Native American casino; the Mashpee Wampanoag tribe has
proposed building a resort casino in Middleborough. Administration
officials want to be careful not to freeze the tribe out of a state
license, which would encourage them to seek federal approval through a
separate process available to Indian tribes, and potentially result in a
fourth casino in the state.
In addition to the authority board, the governor's bill would establish
a 12-member advisory committee that would give key lawmakers a chance to
offer their input. Five Cabinet secretaries -- health and human
services, public safety, administration and finance, housing and
economic development, and labor and workforce development -- would sit
on the board, along with three gubernatorial appointees: a union
representative, a gambling addiction specialist, and a police chief.
Senate President Therese Murray, who has expressed her support for
expanded gaming, would also have two designees, as would DiMasi.
The money collected from the casino operators would go into seven trust
funds. Among them would be the Community Gaming Mitigation Fund, which
would get 2.5 percent of gross annual gaming revenue -- estimated at
between $40 million and $50 million a year -- to pay local costs
directly related to casinos, including increased police and fire
services. An equal amount would go into the Gaming Public Health Fund to
pay for social service programs.
Three other funds would be set aside to pay $200 million annually toward
property tax credits for about a million homeowners; $200 million in
transportation improvements; and any amounts required to offset losses
in the state lottery's annual revenues.
The Boston Herald
Thursday, October 11, 2007
Casino proposal ready to roll
Sources: Plan a boon for infrastructure
By Casey Ross
Gov. Deval Patrick’s plan for three casinos would generate $3 billion
for bridges and roads, guarantee a 3 percent annual hike in lottery aid
to municipalities and impose harsh penalties on casinos that try to
shortchange the state on revenue, sources told the Herald.
The governor’s proposal, to be filed formally in the Legislature today,
sets forth a detailed framework to auction licenses to three casino
developers that would have to pay the state a bare minimum of $200
million for a license, as well as $350,000 in application fees.
State House sources said the legislation will also create a seven-member
gaming board to review the applications and determine who receives a
license by weighing a variety of factors, with the size of the monetary
bid being only one consideration.
The filing of the bill today will start a lengthy process of research
and debate in the Legislature, where casinos still face an uphill fight
against House Speaker Sal DiMasi and other gaming skeptics.
Patrick says his plan will create a $2 billion explosion of economic
growth in Massachusetts and provide 20,000 new jobs.
Patrick administration officials who offered details of the proposal
yesterday said the bill provides previously undisclosed mechanisms for
increasing funding for both transportation and for municipal services in
cities and towns through the state lottery.
The money for transportation -- initially slated to be $200 million a
year -- will be vested in a fund that will create immediate room to
borrow up to the $3 billion for bridges and roads, officials said.
“This would allow us to significantly reduce the backlog of
transportation needs,” one administration source said of the casino
money, which will also pay for average annual tax relief of $204 for 1
million residents.
The legislation also guarantees that cities and towns will receive a 3
percent annual boost in aid from the state lottery, expected to suffer
losses of up to 8 percent from the introduction of casinos.
Previously, Patrick had said only that the lottery would be reimbursed
any losses due to casinos, but sources said the legislation ensures aid
to cities and towns increases every year. Currently, the lottery
provides about $900 million a year for municipal services statewide.
The proposed bill includes harsh criminal penalties for casino operators
who violate agreements with the state by trying to keep a greater share
of their profits. The state is expected to tax casino proceeds between
27 percent and 30 percent, generating about $600 million annually.
If casinos try to skirt the deal, they will be subject to fines of up to
$100,000; if the misdeed is tied to an individual, a 2½-year prison
sentence could be imposed, along with a $25,000 fine.
Sources said the bill also imposes strict limits on the legalization of
gaming, allowing only resort casinos to operate betting parlors. Any
nonlicensed individual or entity that tries to offer gaming could be
subject to five years in prison or a $100,000 fine.
The casinos would be overseen by the seven-member gaming board, as well
as a 12-member advisory committee to be composed of officials in the
governor’s administration and other groups.
The cards are on the table
Key aspects of Gov. Deval Patrick’s Massachusetts casino plan:
Seven-member gaming board would review applications and oversee casinos.
Twelve-member advisory board also would oversee casinos. Profits would
pay for gaming divisions for attorney general and state police.
State’s revenue from casinos used to relieve taxes and fix bridges and
roads.
Lottery losses reimbursed. Cities and towns would get 3 percent annual
boost in lottery cash.
Public health trust fund - paid from 2.5 percent casino revenues - would
target gambling addiction, child welfare and domestic violence.
Sale of licenses for three resort casinos. Preference given to American
Indian bidders.
Developers would pay $200 million upfront and a $350,000 application
fee. Casinos would pay state 27 percent of annual profits, about $600
million annually.
Local referendum for each casino community, including Middleboro, which
would vote again. Vote would precede casino application.
The Boston Globe
Thursday, October 11, 2007
A Boston Globe editorial
Casinos: raising the stakes
The bill that Governor Patrick files today to license three casinos in
Massachusetts addresses concerns that the integrity of the games or the
probity of state officials might be compromised as a result of the
expansion of legalized gambling. The Patrick administration has promised
a best-in-the-nation casino plan. That is what is taking shape, at least
from the regulatory, enforcement, and ethics perspectives. But his
proposal for how the state's share of casino revenues should be spent
needs work.
The bill would establish an independent, seven-member Massachusetts
Gaming Control Authority that includes the state treasurer, state
auditor, and five members appointed by the governor. The treasurer would
be well-placed to ensure that the Lottery is held harmless, as the
casino bill intends. Proceeds from the state Lottery, which now provides
more than $900 million in direct aid to cities and towns, are expected
to drop off, at least initially, as a result of casino competition.
The bill also makes clear that regulatory and enforcement functions
would be conducted by separate agencies to avoid possible conflicts of
interest or attempts by casino operators to gain undue influence in the
licensing process. Wisely, investigations would be placed in the hands
of the attorney general.
There is always the risk that public officials will get too cozy with
casino interests or that regulators will become dominated by the
industry officials they oversee. The best way to guard against this is
to enact strict post-employment agreements. The Patrick bill goes even
further by proposing that no board member or employee of the authority
have any interests in the gaming industry either three years prior or
three years after employment. The ethics point is driven home even
deeper with a three-year post-employment ban for all employees of the
executive branch.
The bill's proposals on how gambling revenues are to be taxed and
accounted for during the collection process are sound. But questions
remain regarding the distribution of the roughly $400 million in annual
revenue expected to flow to the state. Patrick proposes to return about
half that amount in the form of an income tax break for homeowners whose
local property taxes equal at least 2.5 percent of their annual income.
Putting $150 to $375 back in the pockets of nearly 1 million homeowners
makes good on a campaign promise and is a clever way to drum up
widespread support for the casino plan.
Still, the rebate plan doesn't address the need for the state to find a
rational way to share revenues with cities and towns at a time when
property taxes are rising and services are declining. Patrick promised
in his campaign that he would "cut the property tax by reinvesting in
cities and towns." That elusive goal hasn't been brought any closer as a
result of his casino bill.
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