Update on Cuts to Casino Gambling Revenues

On February 22, I wrote about possible cuts to the casino gambling revenues received by local governments in Indiana (Riverboat Wagering Tax to Monroe County May be Cut).  Since then, Senate Bill 528 passed the full Senate and was sent to the House for consideration.

The version of SB528 that passed the Senate makes some major changes to the taxes levied on gambling businesses, including eliminating the riverboat admissions tax (paid by casinos based on the number of people that go through the turnstile at the casino, regardless of amount paid by casino patrons), and replacing it with a 3.45% supplemental wagering tax based on the adjusted gross receipts of the casino.

In addition, and of direct interest to non-casino counties such as Monroe, SB528 replaced the flat $33M/year revenue sharing arrangement (which allocated $33M of riverboat admissions taxes to local units of government in non-casino counties based on their relative populations) with a new arrangement in which 5.1% of the taxes collected (after June 30, 2014, and other than from the French Lick Casino) will be distributed to local units of government in non-casino counties.

Legislative Services Agency, in the Fiscal Impact Statement for SB528, estimates that this change will result in a net loss of $6.65M in revenue to non-casino casino counties as of FY2015 and beyond.

The Association of Indiana Counties (AIC) provides a projection of the impact of this change on each local unit of government in Indiana. I did my own projections based on the FY2015 change in overall receipts from the 5.1% tax as projected from the Fiscal Impact Statement, and came up with slightly different numbers from AIC — but they only differ by a few hundred dollars, which is well within the margin of error for the $6.65M revenue reduction, in any case.

The table below then summarizes the impact of this legislative change on Monroe County for FY2015 (including both AIC’s projections and my projections). It appears that Monroe County as a whole will see $164K or so less in revenues from casino gambling in 2015. This is clearly something that needs to be taken into account in budgeting for the next few years — but is not a game-changing (pun intended) hit to our community’s revenues for public services.

Unit of Government  2012 Distribution  AIC Projected Loss 2015 Projected Distribution (McKim) 2015 Projected Loss (McKim)
Monroe County Government  $302,078.48  $60,415.70  $241,205.09  $60,873.39
City of Bloomington  $476,312.84  $95,262.57  $380,328.59  $95,984.25
Town of Ellettsville  $37,782.77  $7,556.55  $30,168.97  $7,613.80
Town of Stinesville  $1,172.94  $234.59  $936.57  $236.37
Monroe County Total  $817,347.03  $163,469.41  $652,639.22  $164,707.81

And of course — anything could happen to this bill as it hits the House! So stay tuned…

Riverboat Wagering Tax to Monroe County May be Cut

West Baden Springs Hotel
West Baden Springs Hotel

Although I try to avoid too much comment on “live” legislation that may change by the hour, the legislation currently under consideration with respect to casinos in Indiana provides an opportunity to discuss another form of revenue that local governments depend on.

Yesterday, the news agency TheStatehouseFile.com reported that:

“The Senate voted Thursday to strip about $6 million in gambling money away from local governments as part of legislation meant to boost the casino industry.”

The full (and very well-written) article is available here.

Senate Bill 528 makes a number of changes to the statutes affecting gaming in Indiana, including a number of tax cuts designed to make Indiana gambling more competitive, now that a number of neighboring states are allowing casino gambling. Under this legislation, according to the article, the home communities of Indiana’s 13 casinos would lose $27M in revenue. Many of these communities rely on this revenue for funding of their roads programs; this loss will be difficult to make up, even if the various attempts to increase road funding overall this year are successful.

However, under revenue sharing legislation established in 2003, Indiana counties that are NOT hosts to casino gambling (like Monroe County) also receive revenue from the Riverboat Wagering Tax assessed on admissions to casinos. The amount of revenue shared with counties is fixed at $33M annually, and is distributed based on population. The following table shows Monroe County’s receipts from the Riverboat Wagering Tax:

Year Amount
2009  $287,870
2010  $287,870
2011  $287,870
2012  $302,078
2013  $302,078

The amendments to SB 528 that passed on Thursday would reduce the $33M revenue sharing amount by about $6M to $27M. Assuming no other changes to the distribution methods, this legislation would result in about a $55K annual cut in riverboat wagering revenue to Monroe County that would otherwise go into the General Fund.Presumably the increase in 2012 reflected the change in population in Monroe County from the 2010 Census.

Obviously all counties in Indiana will be watching this legislation, which could see a full Senate vote next week, very closely.

For some good background on casino gambling in Indiana, see the following (slightly old, but still very useful) references: