Casinos: More Tax Revenue or Less?
There is a open debate on the impact of a proposed ballot initiative that would create four new casinos in Arkansas. The state issued a revenue impact statement last week claiming that adding new casinos and taxing them would reduce state tax revenue by $36 million in the first two years. Supporters of the Casino Amendment argue new casinos would increase tax revenue by $120 million per year. Their breakdown is $66 million going to the state, $33 million to cities/counties, and $21 million to support Oaklawn/Southland purses for live horse/greyhound racing.
The proposed constitutional amendment has not yet been approved to appear on the ballot but supporters are still securing signatures. They have until August 24 to get 84,858 valid signatures. The amendment would authorize two new casinos in Pope County near Russellville and in Jefferson County near Pine Bluff and expanded gaming at Oaklawn Racing in Hot Springs and Southland Gaming and Racing in West Memphis.
Tax Revenue Allocation
Under the proposed amendment, taxes would be assessed and distributed as follows:
- Casinos Net Proceeds: 13% tax on first $150 million; 20% tax on receipts above $150 million
- 55% of this would go to state general revenue
- 17.5% to the racing commission for purses for live horse and greyhound racing
- 8% to the county in which the casino is located
- 19.5% to the city/town in which the casino is located (if not located in a city/town then to the county)
When Government Controls The Numbers
This disagreement on tax revenue estimates highlights an ongoing skepticism for “revenue impact statements”from the Arkansas Department of Finance and Administration (DFA). Estimates during legislative sessions seem to vary widely depending on the current administrations support/opposition for a piece of proposed legislation.
This past session DFA claimed that estimating the cost of tax exemptions would require spending hundred of thousands of dollars to determine. They claimed additional staff including economists were needed. This testimony before the tax committee killed efforts by State Representative Justin Gonzales (R-Okolona) to provide more transparency.
When the government controls the numbers, the ability to debate their significance is a arduous cause.
In this case it would seem pretty obvious that by creating casinos and taxing them that tax revenue would go up. Yet, the government argues it would actually decrease state general revenue.