July 7, 2006

Examining the Casino Promises

Carroll Andrew Morse

In today’s Projo, Katherine Gregg reports on the vague promises being made in support of voting "Yes" in the constitutional referendum that would allow the state to name a private casino operator without a competitive bidding process…

Framed as an open letter to the governor from Gary Loveman, president and CEO of Harrah's Entertainment, and the Narragansetts' Chief Sachem Matthew Thomas, the ad states the oft-lamented fact that Rhode Islanders "currently pay among the highest property taxes in the country."

"If voters pass Question 1," the ad says, "they can be confident it will substantially reduce those rates."

But when asked yesterday to be more specific about the kind of "tax relief" a voter could expect, casino-campaign spokesman Jonathan Romano said: "property tax relief."

Asked what specifically that meant, the newly hired Romano said: "What does it mean to you?"

Here’s what it means to me: under best-case assumptions, a 10% cut in property taxes is possible, but using more realistic assumptions, a much smaller cut is likely.

The best-case casino tax revenue figure quoted in this and other reports is $144,000,000 dollars. The most up-to-date data available from the Rhode Island Department of Municipal Affairs website (from 2004) reports that Rhode Island municipalities collect about $1,760,000,000 in local taxes. That figure includes some sources of revenue beyond residential property taxes, like commercial property taxes, inventory taxes, etc. If it is assumed that 80% of the municipal levy comes from residential property taxes, and that the projected $144,000,000 all goes towards replacing residential tax-revenue, a property tax-cut of about 10% is possible.

But $144,000,000 is 1) a best-case scenario 2) that includes the dubious assumption that revenues at Lincoln Park and Newport Grand stay the same as they are now. Because the state gets 60 cents on the dollar from the exisiting facilities, but probably only 25 cents on the dollar from the new casino (under the proposals the legislature favors and will be able to implement with no checks or balances if the constitutional amendment passes), the same amount of people gambling the same amount of money could result in a big loss in revenue for the state.

And as Gary Sasse of the Rhode Island Public Expenditure Council points out, there is no guarantee that city and town governments will use casino revenues for tax relief rather than increased spending …

"It's hard to see how anybody can guarantee property-tax relief because they don't control municipal spending," Sasse said.
On multiple fronts, casino proponents seem to be promising more than they can deliver.

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"On multiple fronts, casino proponents seem to be promising more than they can deliver."

The only thing that "Save Our State" and the governor have to convince the public of is this:

Since when does a private corporation care about 'helping' people unless, in doing so, it helps themselves even more? If Harrah's was serious about lowering property taxes in RI, they'd pay us the same 40% that they offered Pennsylvania.

Posted by: Greg at July 7, 2006 12:44 PM

I couldn't agree more, Greg.

Harrahs is in a tough spot here. The Brown University Poll shows that the majority of voters are uneasy with the framing of this deal, and despite their hollow promises for property tax relief, I doubt the referendum gets more than 40% approval.

Even a minimal PR campaing on the part of SOS will have a devestating effect on the Harrah's deal. And to secrecy surrounding the options held on the development land in W. Warwick wreaks of inside politics, and I am more and more convinced that Rhode Islanders are at the end of their ropes when it comes to backroom deals.

I predict that the good news is that either an open-bidding process will likely be adopted, or the casino will die from a lack of support. The bad news is that we're going to have to endure at least another 2 years of this dreadful casino debate either way

Posted by: johnb at July 7, 2006 2:54 PM

Point of order.....

I beleve Harrahs was willing to pay 52% in Pennsylvania.

The following was published in the Detroit Free Press on 27 Mar 2006:

"....despite... a tax rate of 52% -- more than six times higher than Atlantic City's or Nevada's -- many of the biggest companies in gambling are interested.

"We think there's tremendous market potential," said Jan Jones, a senior vice president for Las Vegas-based Harrah's Entertainment, which is involved with two license applications."

The "boys" on Smith Hill are giving away the farm.

Gee, I wonder what's in it for them?

Especially the WW contingent!

We get the Governmant we deserve!

Posted by: aldo at July 7, 2006 5:47 PM

52 percent or fight!
And these GA jobbers have their ears tuned for the siren song of Jan Jones. Since she's already handed out so many $5,000-per-month consulting jobs to their former colleagues, they hope for bigger and better-paying jobs once this thing goes into the ground. (if you've ever seen a pic of Jan...I just get the impression she's not used to men saying "no" to her).

Posted by: Rhody at July 8, 2006 12:44 AM

I say fight nevertheless. How will this make RI any different than New Jersey, which taxes its people at some of the highest in the nation despite the revenue through its gambling empire. Yuk! What an awful place to live - and so it will be for RIers.

Posted by: Phe Propterhoc at July 8, 2006 12:25 PM

richard oster has started an anti casino group with a $3 million budget. all of the baloney that harrahs has been telling ri will be exposed. the deal will be exposed and the peopel that voted for it will look like total fools,

its all over for harrahs

Posted by: johnpaycheck at July 9, 2006 2:41 PM

"Hollow promises for property tax relief", indeed.

Our spending-crazed state and local governments will not treat this as a substitute for real estate and income taxes but a supplement to them. "Oh boy, more money to hand out to special interests and cronies!"

Moreover, casinos add nothing to an economy but add corruption to government. The legislature brashly admitted the latter when they refused to amend this referendum with a revolving door clause, effectively sending their resumes and pay scales to Harrahs.

All power to Richard Oster and SOS.


Posted by: Susan at July 9, 2006 4:43 PM

Does anyone else get the sense that these casino advocates are getting more and more nervous? I say good. They have much to be nervous about.

Posted by: Tim at July 9, 2006 11:40 PM

I agree, Tim - the ad blitz is under way. I expect that soon, the candidates will have trouble finding air time to buy after Harrah's sucks it all down. If I were running Carcieri's campaign, I'd be pounding home his opposition to the casino - probably the strongest issue he's got.
And may Lew Pryor knock Williamson out of the House, although I expect that campaign to get really ugly.

Posted by: rhody at July 10, 2006 12:59 AM

With Dickie Oster at the helm, this effort to stop the casino crap could be a disaster...

Other than being able to shake down people for money, he's no leader...

Posted by: Papa at July 11, 2006 7:58 AM

"With Dickie Oster at the helm, this effort to stop the casino crap could be a disaster...

Other than being able to shake down people for money, he's no leader..."

Some could reasonably say the same about the PROPONENTS of the casino. Tim "I smash people's heads through windows" Williamson is a real positive. As is Guy Dufault.

But enjoy trashing those speaking while ignoring the sense coming out of their mouths. It's the Rhode Island way.

Posted by: Greg at July 11, 2006 9:41 AM

Want to know why so many people are opposing casinos in their towns? Check out an Oregon web site:

Lost taxes - or put another way, public subsidy - for Oregon casino profits:

Public tax money given to Oregon tribes that have casinos earning millions in profits each year.

Economic health of casino towns vs. non-casino towns in Oregon:

Crime associated with casinos:

Casinos Prey on Seniors:

Kiddie Bingo - training the next generation of gamblers:

PACT is only one of many groups fighting casinos across the nation:

Posted by: T D at July 12, 2006 11:32 AM

The proliferation of casinos MUST be brought under control! This isn't a case of the poor, benighted native American finding a way to make money. This is a case of large moneyed interests using the Indian Gaming Regulation Act to further line their pockets at the EXPENSE of the Indians. It is a case of weak willed and money hungry politicians who will rollover and play dead, ignoring state constitutions and constituents desires, in an effort to gain re-election. These casinos are a blight upon the land, and the methods used to put them in place and keep them in operation are illegal.

Posted by: mizzshallot at July 12, 2006 1:05 PM