Jerry Kopel

KOPEL: CASINO TAX WOULD HELP HIGHER ED

Community college money there for taking

I seem to be the only one who has dared to suggest that the income raised by the state’s new casino tax be used to replace general revenue money for community colleges.

Colorado voters didn’t vote “yes” on Amendment 50 in 2008 — approving higher bets, all-day and all-night betting and additional games — because they wanted to pad the pockets of casino owners. The state’s casino supporters knew that, if they wanted all that, they also had to take tax hike authority away from the Limited Gaming Commission by requiring approval of a tax hike by Colorado voters.

As the fiscal year began July 1, 2009, we knew the state was facing a funding shortage of nearly half a billion dollars, and that no more magic “tricks” remained to be played.

Sometimes I feel like I’m all alone, standing on the roof shouting, “Death to the deficit!” If legislators want to consider a real fix, I urge them to read my Statesman columns for Feb. 13, April 3 and May 1. If you don’t have those newspapers, order the back issues or check my Web site, www.jerrykopel.com.

Amendment 50, according to staff work by the Legislative Council, should produce $300 million in casino taxes over the next five years, of which $222 million will go to community colleges. According to Amendment 50’s propopents, that money was to be in addition to money budgeted for community colleges out of general revenue. But Amendment 50 never said so.

Setting a floor for community college budgets by way of statutes doesn’t count for much when you are lying on the railroad tracks and can hear the train whistle getting louder. But that part actually is easy. You just need to yell “Yes!” to transfer the revenue fund money by a vote of 18 state senators and 33 state representatives.

Set the community college budget, but then keep the casino tax flowing in as a substitute for general revenue funding. For every dollar you pour in from casino tax funds, you take one less dollar from general revenue. That would provide $61 million extra in other higher education funding.

But don’t stop there. The Constitution doesn’t limit the percent of casino adjusted gross proceeds subject to tax to 20 percent. It can be as much as 40 percent. If Legislative Council staff work turns out to be anywhere close to reality, raising the tax level to 30 percent would DOUBLE the total tax funds flowing into community colleges. Instead of $61 million in 2010 and 2011, the amount would be $122 million in substitute funding.

The staff workers’ figures suggest a $1.5 billion increase in casino adjusted gross proceeds over the next five years. A 20 percent tax, taking no more than $300 million, leaves $1.2 billion in profits. If you increase the tax to 30 percent, casino owners and stockholders will still see $900 million in increased profits.

The Denver Post recently looked into “who owns what” in the casino industry. Of the five largest casinos, four are in Blackhawk and one is in Central City. Three of the five are private. No public stockholders to worry about.

Raising casino taxes would have to go to a statewide vote, which could still occur in November if the governor calls a special session. The number of taxpayers affected is slight. Most of the new casino tax, according to The Post, will be paid at casino headquarters in Indianapolis, Las Vegas and St. Louis.

And there will not be a race to downgrade the new gambling possibilities. Casinos are in competition. No casino is going to let another casino pick up new gamblers by treating their customers more royally. After all, $900 million in profit will come from those new games and hours, which should be enough to keep casino owners and stockholders happy. The casinos will spend millions to oppose a tax hike, but all you need to win this November is to have voters look at the front-page recession stories.

In a separate and shorter blurb, The Denver Post reported, “for the fiscal year that ended June 30, the industry paid $94.9 million in gaming taxes, down 12 percent from $108.1 million in fiscal 2008.”

That would have been taxes on a gross adjusted profit of around $475 million from profit prior to Amendment 50 changes.

It is not clear exactly how a tax measure would be put before the voters, either in 2009 or 2010. After the Limited Gaming Commission decides to consider a tax increase, the commission has to give casinos an opportunity to appear in hearing. The commission has to leave a licensed operator of a casino a reasonable (or “fair and just”) profit after statutory scheduled costs are paid under CRS 12-47.1-Part 6.

Does the Legislature have to get involved by passing a resolution to have the tax hike on the ballot, or does the casino commission decision go to the Department of State as an issue for the voters? Would Ritter call a special session to consider the gaming commission action?

Jerry Kopel served 22 years in the Colorado House.