Casino Revenue and Property Tax Relief

In today’s Projo, Katherine Gregg reports on figures provided by Rhode Island’s casino supporters describing how taxes on gambling revenues might be used to provide property-tax relief to Rhode Island cities and towns. Unfortunately, a figure discussed by state budget analyst Peder Schaefer (who is very skeptical of the casino advocates’ analysis) is presented in a manner that may confuse the issue…

Legislative backers of the proposed West Warwick casino are dangling the promise of $119 million to $144 million in “property-tax relief” for their cities and towns back home.
The promise was contained in one of the handouts the casino’s legislative backers provided at the news conference earlier this week to trumpet their campaign to change the state Constitution to specifically allow the Harrah’s-backed casino.
The handout shows communities getting anywhere from $1.6 million in new money on Block Island to $22.9 million in Providence under the rosiest scenario…
But none of the legislative backers could explain exactly how they arrived at the numbers.
The state’s chief budget analyst, Peder Schaefer, said the suggested allocation bears little resemblance to the “revenue-sharing” formula the state used to allot $51 million in municipal aid last year.
“We don’t understand what they have done,” said Schaefer yesterday. “Whether the $144-million figure is any good or not, I don’t know. . . . But it ends up, they are giving all the rich communities a much bigger share of the money.”
Mr. Schaefer is discussing how one portion of state aid is distributed, not the total amount of state given to cities and towns, but the comparision of the $119,000,000-$144,000,000 in estimated casino aid to the $51,000,000 in existing “municipal” aid may create the impression that casino revenue will double — maybe almost triple — the amount of aid available to cities and towns.
This is not the case. $51,000,000 is only a small portion of the the total state aid given to cities and towns. At the very least, it does not include the approximately $650,000,000 that the state provided to cities and towns in the form of education aid (included on a separate line item in the state budget) last year.
Since casino revenue is supposedly “replacing” property tax revenue, the best way to make an initial estimate of the impact of casino revenue on property taxes is to compare the amount of casino aid slated for a city or town to the amount of property tax collected by that city or town and not to the amount of state aid it received.
Providence is a useful example for this, because it has a very high property tax rate (making it a prime candidate for property tax relief), and because a casino revenue figure for Providence is provided in Ms. Gregg’s article. According to the city budget, Providence expects to collect about $237,000,000 in property taxes this year. This means, assuming that the $22,900,000 in projected casino-based aid all goes towards replacing property tax revenue, the result is a less-than-10% reduction in property taxes. And that is the result using the casino advocates’ best case numbers.
Is that the scale of relief that casino supporters have in mind when they envision the benefits that a casino brings?

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Jim
Jim
15 years ago

These casino supporters are nothing more than snake-oil salesmen. Don’t believe them.

tcc3
tcc3
15 years ago

It would be nice to see the state try to attract something other than travel,tourism, & entertainment. Between, the proposed airport expansion, casino, Lincoln & Newport…it seems to me that industry-wise we are putting all of our eggs in one basket.

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