Joliet riverboat casino officials threatened Tuesday that if the General Assembly votes next week to finance education with a gaming-revenue tax hike, riverboat host communities and employees will suffer.
At a special meeting of the Joliet City Council’s Legislative Committee, casino representatives told local legislators that the money would be carved out of capital-improvement projects, salaries and neighborhood contributions–not their own bottom line.
“The problem for the community is that as businessmen, we’re going to do all we can to keep our bottom line from deteriorating. So we’re going to look at other ways to pick up this $8 million they’re taking from us,” said Peter Ferro, chief executive officer of Harrah’s Casino Joliet.
But Ferro and Empress Casino General Manager Tom O’Donnell proposed an alternative, which they say has statewide industry support: The General Assembly should allow Illinois riverboat casinos to operate as moored barges, rather than sailing vessels.
That would allow the boats to save money now spent on hull inspections and in meeting other Coast Guard requirements. Ferro estimated that Harrah’s annual bill for maritime operations is nearly $6 million.
Although Ferro and O’Donnell said they would continue to operate along a simulated cruising schedule that limits boarding times, passengers would be able to disembark at will. That would make Downstate Illinois casinos more competitive with nearby riverboats docked in Missouri and Iowa, they said.
“We’re saying, `Give us the opportunity to work with the legislators on a funding alternative we can live under,’ ” O’Donnell said. But he acknowledged that the proposed higher tax rate is on the verge of becoming a reality.
Under a school-funding package backed by Gov. Jim Edgar and House Speaker Michael Madigan, the state tax on riverboat casinos’ gross adjusted receipts would shift from a flat 20 percent levy to a graduated rate between 15 and 35 percent. The more a riverboat takes in, the more it would have to pay.
According to figures from the Illinois Gaming Board, the Grand Victoria in Elgin, which took in more than $174 million in gaming receipts last year–the most in the state–would be the hardest hit. The boats with the next highest receipts, which would fall into the 35 percent tax bracket reserved for boats taking in more than $100 million per year, are Harrah’s, Empress and Hollywood Casino in Aurora.
The new formula is part of a school-funding bill expected to raise $485 million through increases in casino, cigarette and telephone taxes.
The Senate-approved bill fell four votes short of passage in the House during the recent legislative veto session. Edgar called a special session of the House on Dec. 2, when the measure will come up for a vote again.
Republican State Reps. Brent Hassert of Lemont and Tom Cross of Oswego, whose districts include parts of Joliet, and Democratic Rep. Jack McGuire of Joliet, predicted Tuesday that the bill would sail to passage. Hassert and Cross previously have voted in its favor; McGuire has voted against.
Ferro said that if the Empress has to cough up extra tax dollars without any relief, it will slash operating expenses by 10 percent and lay off 10 percent of its 1,700 employees.
O’Donnell said he has not done the math, but Harrah’s, too, would have to cut workers and expenditures. Harrah’s spokeswoman Carolyn Qualls said the new tax would cost her casino $11.5 million next year.
Both casinos were planning to break ground within the next few months on hotels. Now they say both projects are on hold.
“It would literally stall that economic momentum we’ve built up over the last five years” since the Joliet riverboats opened, said City Councilman Tony Uremovic.
Hassert and Cross said they will try to schedule a meeting Monday with Edgar or Madigan or both to discuss the riverboats’ moored-gaming proposal. They said it is probably too late to change the pending bill, but they hope to gain promises of support for moored gaming when the General Assembly reconvenes in January.
Hassert said many lawmakers avoid dockside gaming, because they fear it could lead to the spread of land-based casinos.
“There might be some kind of window that we can work on to convince them that this is not dockside,” Hassert said. “But we’re not coming from a real big bargaining position. That’s the problem.”
