Lawmakers look at raiding gaming fund

By Leslie Jorgensen
THE COLORADO STATESMAN

Colorado gaming communities have benefited from one-arm bandits over the past decade, but if a bill passes in this legislative session, the machines won’t be spitting grant dollars this year — and maybe not for several years.

The bill will officially transfer roughly $6 million from the Local Government Limited Gaming Impact Fund to the General Fund. The Gaming Impact Fund is among other funds that add up to $547 million and have been earmarked to offset the $600 million shortfall in the FY 2009-10 state budget.

Overall, the session faces closing a $1.5 billion deficit, including this year’s shortfall and the projected shortage in FY 2010-11.

The Gaming Impact Fund is one of several funds that Gov. Bill Ritter suspended last year, in an effort to divert revenues to the General Fund to close the budget deficit. Other targeted funds include Energy and Mineral Impact Assistance Grants and tire recycling grants.

The money, however, can’t be transferred into the General Fund without legislation.

Senate Majority Leader John Morse, of Colorado Springs, said it’s likely that each fund will be addressed in individual bills that will call for eliminating the grant programs for several years.

“We don’t want to have to come back next year and the next, and ask the same question. It makes more sense, when the economy improves, to propose a bill to restore the funds,” said Morse.

Bets are that the bill to shift the Gaming Impact Grant program will be opposed — particularly by municipalities and counties affected by gaming.

But, said Morse, “At the end of the day, it will pass.”

The Local Government Limited Gaming Program was established by the Legislature in 1997 to provide grants to areas that faced huge new needs after voters approved gambling in Cripple Creek, Black Hawk and Central City in 1992.

Funding for the grants is derived from a percentage of state tax revenues generated from gambling.

The grants offset the increased costs of law enforcement, courts, bridge and road improvements, emergency medical response, victim advocacy services and youth programs.

In 2008, 50 grants totaling nearly $6.9 million were approved for services in Boulder, Clear Creek, El Paso, Fremont, Gilpin, Jefferson, La Plata and Teller counties. Grant requests totaling $7.6 million were requested last year.

In August, Susan Kirkpatrick, director of the Department of Local Affairs, which administers the grants, notified recipients that the program had been “eliminated for the 2009 funding cycle … As a result, the 2009 Local Government Limited Gaming Impact Program has been suspended until future revenues are available.”

“The gambling towns and the few people who still live there are big winners in Colorado’s casino gambling,” wrote Rep. Jack Pommer, D-Boulder, of the budget crisis.

“Among the big losers are the communities that surround the casino towns. They get the crowds, the crime, the car wrecks and all of the other problems, but no direct compensation from the casinos,” said Pommer.

He said legislators are wrestling with difficult choices to balance the budget. Do you take money from K-12 public education, health care programs or the Gaming Community Impact Fund?

“…despite the local pain it will inflict, I expect the governor’s request will hold,” said Pommer.

David Adamson, executive director of the Mountain Family Health Care Center in Black Hawk, said the freeze on funds “came as a punch in the gut.”

The health care center, which serves people in Gilpin, Jefferson, Boulder and Clear Creek counties, had received a grant for $242,601 in 2008, but its request for $267,589 last year was left on the budget-cutting-room floor.

Adamson said the center’s two physicians and nine staff members served more than 2,800 individuals who made 6,000 visits over the past year.

The notification dealt a knock-out punch to the mountain town of Victor, a few miles east of the Cripple Creek gaming mecca.

Last year, Victor had counted on receiving $420,300 in grants to fund fire and emergency medical services, law enforcement and street maintenance. The loss of funding translated to a 50 percent budget cut to the
municipal budget.

“The city of Victor, which has no choice of gaming impact, will be devastated, and its future existence could be jeopardized,” said Victor Mayor Serena Bielz.

The town of 454 folks, Bielz said, can’t exist on annual local tax revenue of about $24,000 and absorb the increased cost of emergency services. She said 80 percent of calls to the two-man police department and the volunteer fire department are related to gambling. The town does receive some other grants to augment local revenues.

Cripple Creek and Victor are located in Teller County, which had requested $1.5 million in grants last year, primarily designated for deputy sheriff patrols, jail operations and road improvements. In addition, the county lost grants totaling $367,000 to help fund health services, which were provided mostly by nonprofits.

Fremont County had received grants of $415,000 in 2005, $400,000 in 2006 and $350,000 in 2008 to repair roads that had suffered wear and tear from increased travel to Cripple Creek. The steady flow of grants stopped abruptly last fall, after the county had requested $486,000 for road improvements.

“We believe the Gaming Impact Funds should be off limits to the governor,” said El Paso County Commission Chairman Jim Bensberg. “The loss of these funds is a direct impact on El Paso County. It’s enormous.”

The county commissioners sent a protest letter listing the negative impacts of suspending the funds to the governor and Joint Budget Committee Chair Sen. Moe Keller, D-Wheat Ridge, in late September. The loss of funds, they said, would eliminate nine staff positions in 4th Judicial District Attorney Dan May’s office. The staff positions were dedicated to prosecuting cases involving child abuse and neglect, drunk driving, assaults and embezzlements — cases all reportedly related to gambling.

The suspended fund amounted to a $454,951 loss to the District Attorney’s Office and $109,108 to nonprofits providing victim and child advocate services.

It’s ironic that the communities began losing grants a few weeks after July, when casinos in Blackhawk, Central City and Cripple Creek began staying open 24 hours a day.

In November 2008, Colorado voters approved Amendment 50, which increased gaming hours, upped stakes to $100, and stipulated that 78 percent of the increased tax revenue would fund community colleges. It’s projected that the colleges will receive $22 million in July 2010.

The good news for gaming communities is that the amendment specifically allots 12 percent of the tax revenue to Gilpin and Teller counties, and 10 percent to Central City, Black Hawk and Cripple Creek.

Voters approved limited gaming in 1990. However, the constitutional amendment allotted 50 percent of the tax revenues to the General Fund and also allowed the Legislature to use the money for other funds, such as tourism promotion, economic development programs, highway projects and assistance to local governments impacted by gaming.

In 1997, the Legislature passed a bill that created the Local Government Gaming Impact Fund. Because the fund is governed by statute — not a constitutional amendment — it is not protected by the state Constitution.

This isn’t the first time that gaming impact grants have been suspended.

In 2003, Republican Gov. Bill Owens froze the grant program. The General Assembly approved a bill sponsored by Senators David Owen, R-Greeley, Ron Teck, R-Grand Junction, and Peggy Reeves, D-Fort Collins, to transfer the grant money to the General Fund.

El Paso County Commissioner Bensberg said that he hopes that Colorado Counties Inc. will help the communities fight the bill and restore the Gaming Impact Fund. But, he noted, the affected counties represent fewer than 20 percent of the state’s 64 counties.

Colorado Gaming Association, an advocate for gaming establishments and communities, has not taken a position on the bill to transfer the grant funds.

“We are concerned, but at this time we’re standing out of it,” said CGA Executive Director Lois Rice. “That could change in the future — but for now, we’re watching the bill.”

Leslie@coloradostatesman.com