Community we have to pay attention to the legislative deals that are being done allegedly on our behalf, but then we get the short end of the stick. Please review this information.
This issue often has arisen given that approval of gaming was sold to voters largely on the promise of additional funding for schools. We and others said at the time that
‘money is fungible’ and that gaming income would just replace monies spent from the General Fund and would NOT result in additional funding for schools.
Megan Brockett Capital News Service June 23, 2014
BALTIMORE — Gov. Martin O’Malley looked into the camera in 2012 and told his audience that expanded casino gambling would mean “hundreds of millions of dollars for our schools.”
The upcoming referendum on gambling had propelled Maryland’s schools into the spotlight of a multimillion-dollar campaign where supporters touted the message that more gambling would be a win for education.
But the measure, approved by voters that fall, has actually worked to send more money to the casino companies this fiscal year than to the education fund that was established when the state first legalized casino gambling in 2008.
The 2008 law set up an Education Trust Fund to receive the lion’s share of gambling revenues from slots at five new casinos. About half of the slots revenue went directly to the education fund and an additional 18.5 percent to other state programs. The casino companies generally kept no more than 33 percent.
But the 2012 law included concessions for the companies to ease their concerns over the addition of a mega-casino in Prince George’s County. The legislation allowed all casinos to add lucrative table games, such as poker, craps and roulette. And it allowed the companies to keep 80 percent of the table game proceeds — while also reducing the share of slots money that goes to the education fund.
As a result, casino companies have kept more than $334 million of the revenues so far this fiscal year while the Education Trust Fund has gotten close to $270 million — marking the first time since casinos opened in Maryland that more of the gambling proceeds will go to the casino companies than to the education fund.
And while expansion of gambling has raised more money overall, both for casinos and the education fund, the money in the Education Trust Fund has replaced — not added to — general fund revenues normally spent on schools.
O’Malley, Senate President Thomas V. “Mike” Miller Jr. and House Speaker Michael E. Busch all declined to comment on the Capital News Service findings, according to their spokespersons.
The casino revenue is “helpful, but it’s not helpful in the way that some politicians have claimed it’s helpful,” said Charlie Cooper, secretary of the Maryland Education Coalition. “If we get $300 million in casino revenues, it doesn’t increase school funding by $300 million, and in fact, it may not increase school funding at all.”
Comptroller Peter Franchot made a prediction in 2008, with the question of legalizing casino gambling before Maryland voters: “Slots are a fiscal fairy tale,” he said. The plan “will not produce one dollar of new spending for education, and I encourage everybody to understand that this industry is a shady and sleazy practice.”
The plan to legalize slots had come from an unlikely source. O’Malley had spoken out against gambling proposals as mayor of Baltimore. But when he became governor in 2007, Maryland faced a $1.7 billion structural deficit in the midst of an increasingly dismal economy.
He called for a special session that fall to address the state’s budget woes, announcing plans to generate revenue through tax reform and the authorization of slot machines in five casino locations around the state.
But he had to win over lawmakers who blocked attempts to legalize casino gambling under former Gov. Robert L. Ehrlich Jr. So O’Malley recommended that the legislature approve a plan for legalization and then put it up for a vote at referendum. He also increased the number of slot machines in his proposal to 15,000 from 9,500, appeasing slots supporters not thrilled about the added step of a referendum.
After contentious debate, the deal that emerged from Annapolis was one that taxed casinos at among the highest rates of any state in the nation. Maryland would keep about 67 percent of the revenue from slots, with most — roughly half of all casino revenue — going to an Education Trust Fund dedicated to schools.
The Maryland Chamber of Commerce and AFSCME, the American Federation of State, County and Municipal Employees, threw their support behind the slots measure — as did the gambling industry. Pro-slots groups outspent opponents 7-to-1, with the Laurel Racing Association and Penn National Gaming contributing a combined $5 million to the total $7.1 million spent on supporting slots.
The Maryland teachers union voted to endorse the measure too, after Miller, the Senate president and a leading slots advocate, warned the union that education spending could face significant cuts if the slots measure failed and the state’s budget trouble continued.
On Nov. 4, 2008, Maryland residents approved the slots measure with nearly 59 percent of the vote. Before even one of the original five casinos had opened, Maryland lawmakers began weighing the question of expanding casino gambling.
Miller, a Democrat from Prince George’s County, announced an interest in early 2010 in adding a sixth casino there. Not long after, the state panel charged with awarding the casino licenses recommended that lawmakers consider allowing table games to help Maryland compete with gambling in surrounding states. Pennsylvania, Dela-ware and West Virginia had all moved to allow table games after Maryland passed its slots-only measure in 2008.
In June 2012, MGM Resorts International announced its interest in building a casino at the National Harbor in Prince George’s County, if presented with an acceptable deal — which included a lower tax rate and table games.
O’Malley called a special session the following month to debate a gambling expansion that would include a sixth casino and Las Vegas-style table games.
But lawmakers met with fierce resistance from some of the companies holding Maryland casino licences, especially the Cordish Cos., owner of Maryland Live! Casino in Anne Arundel County.
Company representatives complained that the proposed sixth casino would be an unexpected, and unwelcome, source of competition that would diminish its customer base and hurt its bottom line.
So, the legislature offered tax breaks to the companies.
Casino companies would get to keep 80 percent of table game revenue and give 20 percent to the Education Trust Fund. The education fund’s share would drop to 15 percent in 2017, when the local governments that host casinos would begin receiving 5 percent of table game revenue.
The education fund’s share of slots revenue would shrink too.
The General Assembly passed the measure, sending it to a referendum as required by the 2008 slots law.
MGM, with its eye on the sixth casino license, gave close to $41 million to the rival, pro-expansion group, For Maryland Jobs and Schools.
Penn National Gaming, with casinos in West Virginia, Pennsylvania and Perryville, Md., led the opposition, spending more than $44 million, according to the National Institute on Money in State Politics.
The teachers union took no position.
After the most expensive campaign in state history — totaling more than $94.9 million — the referendum passed with 51.9 percent of the vote.
The amount of revenue going to casino operators each month of fiscal year 2014 has surpassed the amount going to the Education Trust Fund. For the first time since Maryland legalized casinos, the casino companies are on track to take in more money this fiscal year than the Education Trust Fund.