Archive for July 9, 2014

Casinos, VLTs can’t fix unfunded mandates – By George J. Marlin

July 9, 2014

The following appears in the July 4-10, 2014 issue of the Long Island Business News:

In 2010, Gov. Andrew Cuomo promised taxpayers he would help municipalities and school districts lighten tax burdens by “undertaking a comprehensive review of [unfunded] state mandates and state laws that otherwise limit the ability of school districts and localities to contain costs.”

Mandates imposed by Albany have been driving many local governments to the brink of insolvency. For instance, Erie County officials told The New York Times their entire property tax levy goes to pay the most costly state mandate: Medicaid. All the revenue is gone, they complained, before the county pays for libraries or snow plows or roads.

Failing to fulfill his promise, Cuomo tried to change the subject by supporting a ballot measure approved by voters last November to permit casino gambling and legislation that expands video lottery terminals in Nassau and Suffolk counties. Approval of these measures, Cuomo insisted, would lower property taxes, create jobs and increase aid to public schools.

Despite the governor’s claims, there’s a consensus among economists that gambling emporiums will not be the panacea for all municipal ills.

Gambling competition in the region – New York, Pennsylvania, New Jersey, Connecticut and Massachusetts – has become so intense that casinos are failing. In New Jersey, the Atlantic Club closed its doors in January, the Revel has filed for bankruptcy and the Showboat, which employs 2,100 people, announced last week that it’s closing its doors Aug. 31.

New York faces serious problems before casino building plans get off the drawing boards. Recently, two developers canceled plans to bid for casino rights in economically depressed Sullivan County because the more affluent Orange County – which is closer to NYC – is also eligible to compete for a gambling license.

The New York Post reported that “the mere prospect of a casino in Orange County makes it impossible to get financing for a gambling resort in Sullivan County, which has been waiting 40 years for one.”

There’s more bad news. In May 2014, Comptroller Thomas DiNapoli released a 34-page report, “Trends in N.Y.S. Lottery Revenues and Gaming Expansions,” which concluded, “The projected new revenues from casinos, VLT expansions and payments by Native American [casinos] would add slightly less than half a percentage point to the state’s existing non-federal receipts. The permanent jobs projected to be created by new casinos constitute a small addition to the more encompassing broader strategy needed to [strengthen] the Empire State economy especially in struggling upstate communities.”

DiNapoli’s excellent analysis gives a slew of reasons why taxpayers should not have high hopes – the key one being that most gambling revenue will not come from out-of-state tourists but in-state residents.

Let’s face it; most rich people who fly to New York from London or Paris to shop on Fifth Avenue are not going to jump into a limo to travel to a Sullivan County Casino or a Suffolk County VLT.

If most gaming customers are local folks, then, “such activity primarily represents substitution of gambling losses for other consumer purchases rather than net new business,” according to DiNapoli’s report. In other words, instead of disposable income being spent in neighborhood restaurants or cinemas, it will be squandered at a betting parlor.

And then there are the social costs. Studies show that a significant number of locals who gamble at gaming parlors close to home can least afford it. They are seniors on fixed income and low-income workers risking their rent and food money.

Also, state and local governments will have to allocate more tax dollars to publicly funded problem gambling programs. Presently, about 5 percent of New Yorkers suffer from problem gambling and about 28 percent of them have experienced a substance abuse disorder. As casinos and VLTs become more accessible, expect these numbers to rise.

Don’t believe politicians who insist gambling – in whatever form – will be a fiscal game-changer for our local governments. Only genuine unfunded mandate relief will begin to help lessen the burden on New York’s taxpayers.