Counting on gamblers to help ease the state’s budget woes, Senate Republicans advanced a plan Tuesday that would boost taxes on high-profit riverboat casinos in exchange for allowing them to open up more gaming tables and slot machines.
The gambling legislation was endorsed by a key legislative panel hours before the full Senate was expected to approve its own version of a $54 billion state spending plan for the new budget year, revising Gov. George Ryan’s day-old spending proposal.
Republicans in the Senate also made it clear that they would not back higher cigarette and real estate transfer taxes at the levels suggested by the governor when they consider ways to raise revenue on Wednesday. Ryan proposed a 50-cent-a-pack boost in cigarette taxes and a tripling of the real estate transfer tax to $1.50 per $500 in property value.
Ryan’s latest attempt to force the legislature to deal with a near $1.4 billion gap in revenues still contained millions of dollars worth of pork-barrel projects for lawmakers that would be paid directly out of the state’s checkbook.
The projects include $300,000 to the Lincoln Park Zoo, $250,000 for the south suburban Southland Chamber of Commerce, $150,000 for a grant to the Quincy Area Community Foundation and $200,000 for Elmhurst Memorial Hospital, in the hometown of House Republican leader Lee Daniels of Elmhurst.
The Senate Republican budget proposal would eliminate Ryan plans for a newly proposed state-subsidized day-care program, a mentoring program for public school teachers, additional money for the Cook County appellate defender’s office and a new student teacher loan repayment program.
It also would reduce by $65 million a state contribution to the pension fund of Chicago Public Schools teachers, but would shift $40 million of the amount into a grant for health-care costs for retired Chicago teachers.
The Republicans on the Senate Executive Committee led the 8-2 vote to approve the gambling industry’s compromise plan, aimed at generating $200 million for the state.
The proposal would raise the state’s top tax on its most profitable casinos to 45 percent from 35 percent, while allowing the four boats most affected by the tax–the Grand Victoria in Elgin, Harrah’s in Joliet, Empress in Joliet and Hollywood in Aurora–to each open new positions for 400 gamblers.
Under the legislation, the new gaming spots could be placed on dry land, such as restaurants or hotels, that are part of the casino complex. That provision provoked complaints from critics that the bill was fully endorsing land-based casino gaming and amounted to an expansion of gambling.
“There is a cost whenever you expand gambling–in addiction, crime and corruption,” said Rev. Tom Grey, founder and executive director of the National Coalition Against Legalized Gambling. “If you want to run [for re-election] on a record of gambling expansion, then that’s what it’s going to be.”
The higher tax levy and the new gaming positions would be in force only until a new, 10th casino in the state opens, under the legislation. But opponents alleged that once the new gaming positions were in place, it would be hard for the state to take them away.
“Nobody’s going to make that kind of investment if they can lose it in 18 months or two years,” said Senate Democratic leader Emil Jones of Chicago.
Sen. Steve Rauschenberger (R-Elgin), who chairs the Senate Appropriations Committee and sponsored the gaming legislation, said the higher casino taxes would raise about $130 million while the new gambling positions would raise an additional $70 million.
“We’re addicted to the revenue,” Rauschenberger acknowledged.
The 1,600 new gaming positions include 1,200 spaces that had previously been authorized for a new casino in Rosemont. But the Rosemont casino is the subject of what portends to be a long legal battle over its licensing, and its gaming positions are dormant.
“I think the Rosemont casino is kind of history, right?” said Senate President James “Pate” Philip. “It ain’t going to happen.”
Ryan said he didn’t believe the legislation constituted an expansion of gambling.
“It’s not any new spots. It’s spots that aren’t generating tax income right now because they’re not being used.”
In Chicago, officials said after a closed-door meeting that the Illinois Gaming Board had reached no settlement with the Emerald Casino, the beleaguered investor group trying to put a casino in Rosemont.
A trial-like hearing is scheduled to begin Wednesday into allegations that top Emerald officials repeatedly lied to the gaming board and sold casino shares to investors with alleged mob ties.
Emerald lawyer C. Barry Montgomery said the company’s earlier offers to settle with the state as part of a deal to transfer ownership of the casino enterprise to MGM-Mirage were no longer valid. That includes a previous offer that would have given the state $500 million plus the tax revenues of a fully operating casino.
“All offers are withdrawn,” Montgomery said. “The state has just lost $1 billion.”
