Casinos and Community Colleges
July 24, 2009
By Jerry Kopel
No one else has dared to urge the use of additional casino tax income to
replace general revenue money for community colleges.
The Colorado voters who voted "yes" on Amendment 50 in 2008 were not
voting on a preference to bulge the pockets of casino owners. They were
voting on higher bets, all day and night betting, and additional games.
If they wanted that, they had to accept taking tax hike authority away
from the Limited Gaming Commission by requiring approval of a tax hike
by Colorado voters
As the fiscal year began July 1, 2009 we knew there will likely be close
to an additional half-billion funding shortage and no more "tricks" that
can be played, no more magic.
I have felt alone standing on the roof, shouting "death to the deficit."
So if legislators want to consider a real fix, please read my
Statesman columns for Feb. 13, April 3rd, and May 1st. If you don't
have those newspapers, check my web site, www.jerrykopel.com, or perhaps
the Statesman publisher Jody Strogoff can make them or the noted columns
Amendment 50, according to staff work by the Legislative Council, should
produce $300 million in casino taxes for the next five years, of which
$222 million will go to community colleges. The amount was, for the
proponents, to be on top of present budget revenue, but Amendment 50
never said so.
Setting a floor for community college budgets by way of statutes doesn't
count for much when you are lying on the railroad tracks and can hear
the train whistle getting louder. That part is easy. You just need to
yell "yes" to transfer the revenue fund money by a vote of 18 senators
and 33 House legislators.
Set the community college budget but then keep the casino tax flowing in
as a substitute for general revenue funding. For every dollar you pour
in from casino tax funds, you delete one dollar from general revenue
being the source. That would provide you with $61 million extra in other
higher education funding.
But don't stop there. The constitution allows the percent of casino
adjusted gross proceeds subject to tax to be 40 percent, not 20 percent.
If Legislative Council staff work was anywhere close to reality, raising
the tax level to 30 percent would DOUBLE the amount of tax funds flowing
into community colleges. Instead of $61 million in 2010 and 2011, the
amount would be $122 million in substitute funding.
The staff workers' figures suggest a $1.5 billion increase in casino
adjusted gross proceeds over the next five years. A 20 percent tax
taking no more than $300 million leaves $1.2 billion in profits. If you
increase the tax to 30 percent, casino owners and stockholders will
still see $900 million in increased profits.
The Denver Post recently investigated "who owns what ?" Of the
five largest casinos, four are in Blackhawk and one in Central City.
Three of the five are private. No public stockholders to worry about.
Raising casino taxes must now go through a vote by Colorado citizens
which vote could still occur in November if the governor called a
special session. The numbers of taxpayers affected is slight. The places
that benefit the most, according to the Post from the 20 percent tax are
casino headquarters in Indianapolis, Las Vegas and St. Louis.
And there will not be a race to downgrade the new gambling
possibilities. Casinos are in competition. No casino is going to let
another casino pick up new gamblers by treating their customers more
royally. After all, $900 million in profit will follow keeping owners
and stockholders in casinos happy. The casinos will spend millions in
opposition to a tax hike, but all you need to win this November is a
look at the front page recession stories.
In a separate and shorter blurb, the Denver Post reported "for
the fiscal year that ended June 30th, the industry paid $94.9 million in
gaming taxes, down 12 percent from $108.1 million in fiscal 2008. That
would have been taxes on a gross adjusted profit of about $475 million
from pre-Amendment 50 changes.
It is not clear exactly how a tax measure would be put before the
voters, whether done in 2009 or 2010. After the Limited Gaming
Commission decides to consider a tax increase, the commission has to
give casinos an opportunity to appear in hearing. The commission has to
leave a licensed operator of a casino a reasonable (or "fair and just" )
profit after statutory scheduled costs are paid under CRS 12-47.1-Part
Does the legislature have to get involved by passing a resolution to
have the tax hike on the ballot, or does the casino commission decision
go to the Secretary of State as an issue for the voters. Would Ritter
call a Special Session to consider the gaming commission action?
(Jerry Kopel served 22 years in the Colorado House.).