Tuesday, January 22, 2008

More Reasons to vote NO on the Props 94-97

Here's what happens should Californians pass the expanded gaming Propositions:

Decreases in Other State and Local Revenues.

The compact amendment would result in reductions of other revenues received by the state and local governments:

Effects on Taxable Economic Activity.
As tribal gambling expands, Californians would spend more of their income at tribal facilities, which are exempt from most types of state and local taxes. This means Californians would spend less at other businesses that are subject to state and local taxes—for example, hotel, restaurant, and entertainment businesses off of tribal lands. This would result in reduced tax revenues for the state and local governments.

Reduced Gambling-Related Revenues.
The state and local governments currently receive revenues from other forms of gambling—such as the California Lottery, horse racing, and card rooms. Expanded gambling on tribal lands could reduce these other sources of state and local revenues. In addition, as the Pechanga tribe expands its casino operations, it may attract customers who otherwise would go to the casinos of other California tribes. If this occurs, these other tribes would receive fewer revenues from their casinos and could pay less to the state under the terms of their compacts.

Less Money in the SDF.
If voters approve this proposition, the Pechanga tribe would stop making payments to the SDF. (Other propositions on this ballot also would reduce payments to the SDF.) Under current law, the first priority use of money in the SDF is to cover shortfalls in the RSTF so that tribes with no casino or a small casino receive a $1.1 million annual payment. If there is still not enough money to cover RSTF shortfalls, the compact amendment requires the state to use a part of the Pechanga tribe’s payment to the General Fund to make up the difference. In addition, other programs (such as grants to local governments) funded by the SDF might need to be reduced and/or paid for from the General Fund.
While these revenue decreases are difficult to estimate, the combined impact would be in the tens of millions of dollars annually.

And that is IF the tribes put all 7,000 machines in. What is the incentive to do so, if they are going to be taxed at 25% of those machines. They won't be able to fill the casino now. Wouldn't it make better sense to increase the tax to 25% of the NEXT 3,000 and then 15% of the last 2,000? Otherwise, it's a net of about $13 million to the state, at best. We need a better deal.
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