Tax cut for casinos would shrink education fund revenue

ANNAPOLIS — A decision Tuesday by a House of Delegates committee to further cut taxes on two Maryland casino owners would leave the state with $32 million less by fiscal 2017 when compared to the bill that passed the Senate.

The action came as House leaders worked into the night to secure the 71 votes needed to pass an expanded gambling bill as the special session called by Gov. Martin O’Malley ended its fifth day.

The Senate, where support for expanded gambling is strong, has already passed its version of the bill and was poised to take up the House measure, which was substantially different, Tuesday night.

Earlier Tuesday, a fiscal analysis of SB 1 showed that Education Trust Fund revenues would still increase in fiscal 2017, but only by $174 million. Gambling bill proponents had previously touted an increase in excess of $200 million to fund public school construction and improvements.

That changed when the Ways and Means Committee decided to effectively reduce the slots tax for Maryland Live casino at Arundel Mills mall to 51 percent and the rate at a future Baltimore facility to 54 percent by 2016.

Later adjustments authorized by the committee could reduce Maryland Live’s tax rate to 49 percent, and Baltimore’s to 51 percent. The current slots tax is 67 percent of gross slots revenues. Table games would be taxed at a 20 percent rate.

Education funding would still receive a boost under SB 1 as amended because of the addition of a sixth casino, in Prince George’s County, and the legalization of table games such as blackjack at all state casinos.

Almost half of all slot revenues go to the Education Trust Fund. Compared the Senate bill, the House bill reduces revenue for education by $5 million in fiscal 2014 and $11 million in fiscal 2016. That amount jumps to $32 million for fiscal 2017 because some tax reductions for Maryland Live and the Baltimore casino do not go into effect until after a Prince George’s County casino opens. Legislation allows for that facility to open no earlier than mid-2016.

If passed by the legislature, voters would still have to authorize table games and the construction of a sixth casino in November.

During floor debate Tuesday night, a controversial amendment that would allow some of the state’s nonprofit veterans’ organizations to operate electronic bingo machines appeared to move the House closer to the 71 votes needed to pass a bill.

The amendment, offered by Del. Joseph J. “Sonny” Minnick, D-Baltimore County, would allow veterans’ organizations in some state jurisdictions to operate up to five pull-tab gambling machines, different from slot machines because results are predetermined, not random.

Veterans’ organizations on the Eastern Shore are already allowed to operate slot machines.

The reconfigured State Lottery and Gaming Control Agency would be responsible for the new machines.

Critics in the House said the amendment was drafted to buy the support of veterans’ advocates for the overall gambling bill, which also legalizes table games such as blackjack at state casinos and authorizes the construction of another gambling site in Prince George’s County.

Minority Leader Anthony J. O’Donnell, R-Calvert and St. Mary’s, said the change was being “used so the support of the veterans could be used for bad policy.”

Del. Doyle L. Niemann, D-Prince George’s, said the amendment was a poison pill for the state, calling it “the most dangerous amendment we’re talking about.”

Niemann said allowing veterans’ organizations to operate the pull-tab machines would “explode slot machine gambling in our state.

“This is the kind of thing we’re going to regret for a long time,” Niemann said.

Republicans, many of whom said they were in support of the amendment, nonetheless were disappointed that similar measures offered by the minority party in past sessions were not adopted by the House.

Del. Kathryn L. Afzali, R-Frederick, offered a similar amendment Monday during a meeting of the Finance Resources Subcommittee. It was easily defeated.

Minnick, chairman of the Maryland Veterans Caucus, said it was important to support the amendment because its connection to the political leadership-supported gambling expansion bill might be the “only shot at ever getting anything for the veterans.”

Lawmakers suggested that the amendment’s adoption could push the body over the 71-vote total needed for passage of the gambling bill. Del. Michael D. Smigiel Sr., R-Upper Shore, said he supported the amendment but would not necessarily vote for the gambling bill.

“I’ll put lipstick on this pig, but that doesn’t mean I’ll kiss it at the end,” he said.