Could Casinos be the Solution to Alabama Budget Troubles?

Senate President Pro Tem Del Marsh’s proposal to bolster gambling in Alabama was heard on the 12th May.

Hearings of Pro Tempore Senate President Del Marsh’s possible amendment to the constitution were held in Alabama a few days earlier. The reason for Marsh’s recommendation lies in the projection of budget problems for next year. It is feared that Alabama’s General Fund will suffer a USD 200 million deficit next year. However, the opening of four casinos and the introduction of a lottery would provide a suitable solution for the state’s problems. The plan to boost the economy this way serves as alternate to increasing taxes.

• Del Marsh proposes gambling bill to close gap in funds
• Governor Bentley advocates a tax raise instead
• House of Representatives yet to decide

Calculations show that a lottery would raise approximately USD 330 million each year. In addition, with the introduction of luxury casinos, the state would rake in USD 70 million on a yearly basis. The same statement showed that the establishment of casinos would create at least 11,000 jobs. Broken down to specifics: enlarging the four existing greyhound tracks with table games and slots would lift income to somewhere between USD 64 million and USD 74 million. Similarly, however, to US gambling laws, Alabama states these as illegal.

The trouble with this plan is that it is not a quick fix

There is a complication with Marsh’s proposal, however: these changes will not be able to resolve the state deficit quickly. Implementation is a long process and 2016 in quickly coming up. Estimates show that the four casinos would have an overall effect of USD 800 million per year. As Rachel Adams spokeswoman said on House Speaker Mike Hubbard’s behalf: “This proposal does not solve our 2016 budget problem and an immediate solution is still required,” she added, “even if a referendum were held, it would take place well into the next fiscal year.”

Governor Robert Bentley denounces the expansion of gambling opportunities as a resolution for budget problems. Instead, he proposed to increase taxes on cars and tobacco and erase some tax benefits and exemptions. According to gambling news, this would raise a ballpark figure of USD 541 million in funds and would most definitely sustain the General Fund in 2016. Recently, the House of Representatives has declared that it is in their intention to introduce a tax increase of USD 150 million (only a portion of Gov. Bentley’s plan) to support the healing process of the Alabama General Fund.

Smokers would be most burdened by the proposed tax raises

Al.com reports show both the House of Representatives and Governor Bentley would prefer if smokers paid the larger part of the tax increases proposed. The House’s plan is to collect USD 60 million per year by raising tax on each box of cigarette by 25 cents. Bentley’s plan was to increase the amount by 82.5 cents per pack. Other strategies include bumps in vehicle rental taxes, car titles (by USD 10) and vehicle sales taxes. These three alone would raise approximately USD 220 million, which is not a bad number regarding the fact that the predicted 2016 deficit is around USD 200 million.

Marsh’s proposal faces other difficulties, too. Governor Bentley would have to forge an agreement with the Poarch Band of Creek Indians to accept table games and slots at their bingo casinos in three locations. Gambling news suggest the Poarch Creek tribe, however, would rather give an aid of USD 250 million in exchange for benefits than to put up with the competition. The tribe has electronic bingo casinos in three towns already. The tribe has already met with legislators and the governor. If Marsh’s bill goes through and the state enters into contract with the Poarch Creek Tribe, there could be a sum of seven functioning casinos.