Jerry Kopel


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,, or perhaps the Statesman publisher Jody Strogoff can make them or the noted columns available.

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 6.

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.).

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