Tag Archives: AP

Delaware Senate votes to bail out three casinos

Delaware’s state senate has voted to redirect $10 billion in economic development funding to bail out three gambling casinos. The measure now goes to the House. Two reasons the casinos are failing: increased competition from Maryland and Pennsylvania and having to share a large chuck of revenue with the state. Lawmakers admit the bailout is only a “Band Aid,” and not enough to salvage the operations.

Supporters defend SB 220 as a jobs protection measure. But the real incentive is more likely the revenues involved. Lottery receipts are the fourth largest source of Delaware’s revenues at about 7 percent of the total bringing in $277 billion in 2013, right behind Income taxes, Franchise taxes, and Abandoned Property.

The casinos are certainly in trouble. According to Delaware Newszap.com Dover Downs Gaming & Entertainment saw a $1 million loss in Q1 2014 and is $46 million in debt. During that same first quarter the casino paid the state $16 million in revenue.

Revenue sharing between the state and the casinos has grown more onerous over the past 20 years. In 1997, the casino claimed 50.2 percent of the revenue and the state took 25.2 percent. In 2009, that split reversed, with the state claiming 43.5 percent of revenues and the casino keeping 37.8 percent.

The incentive for the bailout is fairly clear though the economic thinking is convoluted. Why not reduce the tax rate instead? Economist James Butkiewicz at the University of Delaware notes that as a voluntary tax it’s easy revenue and the state doesn’t have to raise taxes elsewhere.

But do casinos deliver for state coffers and economies?  Economists Douglas Walker (whose field is casino economics) and John Jackson find that while lotteries and horse racing tend to increase state revenues, casinos and greyhound racing tend to decrease it. Using recent data, Walker and Jackson find casinos have a positive economic impact. There are many other things to consider when thinking about the effects of casinos. As state creations there is ample opportunity for corruption and regulatory capture. Walker and Calcagno find just such a link in their paper in the journal Applied Economics (Dec 2013), “Casinos and Political Corruption in the United States: A Granger Causality Analysis.” And as a recent article by the WSJ notes oversaturation of casinos on the East Coast has also triggered an interstate “war” for revenues. Delaware’s gaming revenues are down 29 percent since 2011. A Delaware Casino Executive laments that the business model they are using is simply, “unworkable.”




Pennsylvania’s FY 2011 budget is filled with WAMs

Pennsylvania has put together a $28 billion budget that is balanced through evasive practices. The budget relies on hundreds of millions in not-yet-promised federal money and overstated revenue increases. More disturbing is the $66 million in “WAMs” or Walking Around Money. Pennsylvania’s version of legislative pork politics, WAMs are revenues that are set aside for lawmakers to shower on pet projects in their districts.

WAMs were ruled unconstitutional in 1995. So the legislature renamed them Legislative Initiative Grants (LIGs). Last year, Pennsylvania lawmakers handed out $110 million in WAMs showered on everything from youth baseball to jazz festivals and fire departments. WAMs are generally reviled as a blatant means of buying votes with public dollars. But what makes the appearance of WAMs in recent budgets all the more offensive is summed up by Marc Levy at AP, “PA Lawmakers tapped grants while deficits grew.”

In the Fields of the Public Sector Unions

In Marlboro, N.J. the teachers’ union are at odds with the school district. The school board wants the Marlboro Township Education Association to pay $950 per member towards a family health benefits package, to help keep the lid on local taxes. The union isn’t budging, it’s going for a second “super conciliation” session on November 24. The town isn’t budging either. At least two residents are pleased with the town’s tough stance.

In Boston, the teachers unions are at odds with an elementary school.  At the John D. O’Bryant School an incentive program (launched by the Bill and Melinda Gates Foundation) awards AP teachers when students pass the exam. The Boston Teachers Union says it’s not fair and the bonus should be distributed to all teachers, since “no one is solely responsible for the development of these students.”

And in Allentown, Pennsylvania Nick Balzano, local leader of the Service Employees International Union’s threatened to put an end to volunteerism by an enterprising Eagle Scout who cleaned up some trails in a local park, ”We’ll be looking into the Cub Scout or Boy Scout who did the trails.” That went viral, fast. U.S. Rep. Charlie Dent demanded an apology from Mr. Balzano who has since resigned.

Disaster Response and Foreclosure

According to the AP, FEMA is exploring how to use foreclosed homes to house people displaced by future natural disasters:

The federal government is exploring how to put Florida hurricane evacuees in foreclosed homes if a Katrina-like storm devastates the region and shelters, hotels and other housing options are full, The Associated Press has learned.

Officials told AP on Tuesday that it is an effort to find some benefit in the foreclosure crisis and keep people close to their homes and communities instead of scattering them around the country, which happened when Hurricane Katrina devastated New Orleans and other parts of coastal Louisiana and Mississippi almost four years ago. Thousands of victims who lost their homes in the storm moved to Houston, Atlanta and other cities, and many never returned.