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Gambling for Roads Proposed

January 16, 2002
By: Kathryn Handley
State Capital Bureau

JEFFERSON CITY - Thursday is grand opening day for the Isle of Capri casino in Boonville, but some Missouri lawmakers might spoil the party with plans to bring gamblers' money to the state after the slot-machine.

Sen. Ted House, D-St. Charles, has filed a proposed constitutional amendment that would allocate revenue from gambling-admission fees to public transportation. The resolution would require voter approval to become law.

House proposes increasing the gaming-boat admission fee from $2 to $4, generating additional revenue that would go to funding public transportation.

Casinos choose to pay the current $2 admission fee rather than charging their customers. Under the Missouri Constitution, revenues from this fee can currently only fund public education. An amendment is required to fund anything else with this money.

"Gambling provides a tremendous number of problems for the state of Missouri," House said. "It makes sense to try to generate revenue from them to try to alleviate some of these problems as well as to fund other things."

Troy Stremming, a lobbyist for Missouri casinos who is chairman of the Missouri Riverboat Gaming Association's legislative affairs committee, said the industry would not support new taxes.

"We think the taxes we already pay are already more than our fair share," he said.

According to Stremming, Missouri has the second-highest tax rate for casinos in the nation at 30 percent. Only Illinois, at 35 percent, has a higher tax rate, he said.

Stremming said that for every $1 increase in admission fees, the tax rate increases by 4 percent. So if House's proposal were adopted, it would bring the gaming industries' tax rate to 38 percent, Stremming said.

"It gets to the point where it's almost punitive," he said.

Stremming said increasing the admission fee would hinder Missouri's ability to keep and attract gamblers, who might turn to casinos in surrounding states. If a tax increase were passed, each casino would have to decide whether to charge a boarding fee directly to customers, or to continue paying the tax itself, he said.

"Guests wouldn't pay a boarding fee at a St. Louis casino when they could drive across the river and play for free," he said.

A tax increase would be especially harmful to smaller casinos, Stremming said. A spokeswoman for the Isle of Capri refused to comment.

House also is sponsoring a transportation-funding bill that would increase the gasoline tax to 22 cents per gallon, raise the general sales tax by one-fourth cent on the dollar and raise registration fees for passenger cars and motorcycles.

The chairman of the Senate Transportation Committee -- Morris Westfall, R-Halfway -- also has sponsored a package of tax increases for transportation. Westfall's bill also would raise the gas tax to 22 cents, but would increase the general-sales tax by 3/8ths of a cent per dollar.

House's transportation bill does not allocate funds specifically for public transportation. He said the casino admissions fee would fill that need.

"There are a number of ways we could have done it but it just seemed to us that that's an area in which there is room for growth in the revenue that can be generated," he said.

As for the cost to gamblers, House said "two bucks is two bucks".

"There's no right to gamble," he said. "It's very much a privilege, and if you're going to set foot on a gambling boat in Missouri there's going to be a fee for doing that."

Stremming said if the legislature did pass a tax increase, the casinos would bear the cost, not the gamblers. He said casinos would not try to make gamblers absorb the cost in non-gaming ways, such as increased drink prices, because it would hurt competitive advantage.

House's proposal does not specify how the newly-generated revenue would be split between urban and rural areas.

However, House said even if his proposal passes, it is only the beginning to fixing the state's transportation problem.

"Now this bill only generates $100 million," he said. "And as statewide funding for public transit goes, that's not going to solve all of the problems, but it's a start."

The senator said Missouri is one of the few states that doesn't provide funding for public transportation.

"We want to make sure that everyone understands that our highway system is in dire need of revenue, and that the consequences of not acting or of not giving the people a choice are something that Missourians do not want to face," House said.