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October 10th, 2012 By German Lopez | News | Posted In: Budget, Government, Casino, News, Education

Casino Tax Not Enough

New casinos around Ohio won’t provide enough revenue for cuts to state aid

casinoHorseshoe Casino - Artist's rendering

A new analysis suggests that tax revenue from Ohio’s new casinos will not be enough to make up for state spending cuts to cities and counties. The findings of the Oct. 1 analysis, by left-leaning Policy Matters Ohio, apply even to casinos and big cities that get extra casino tax revenue. They still lose twice in state aid what they get in new taxes, according to the report.

Overall, the analysis found that new casino revenue will provide $227 million a year to counties and cities. In total, state aid to counties and cities has been cut by about $1 billion. That means the tax revenue isn’t even one quarter of what cities and counties will need to make up for cuts.

The cuts also won’t be enough to make up for state cuts to schools. When casino plans propped up around the state, governments promised that revenue from casinos would be used to build up schools. However, state aid to K-12 education has been cut by $1.8 billion, and new tax revenue will only make up 0.5 to 1.5 percent of those cuts in most school districts, according to the Policy Matters report.

In 2013, Cincinnati will become the fourth Ohio city with a casino.

Cleveland and Toledo have casinos, and a new casino opened in Columbus Oct. 8. 

Currently, the system is set up so each casino is taxed at 33 percent of gross revenues. That revenue is split into many pieces with approximately 34 percent going to the school fund. Each city with a casino also gets an exclusive 5 percent of its casino’s revenue.

For Cincinnati, that means about $12.1 million in new annual tax revenue. But even with that revenue, Cincinnati will still be losing about $17.7 million in state funding, according to calculations from Policy Matters.

In past interviews, Rob Nichols, spokesperson for Gov. John Kasich, has repeatedly cited the constitutional requirement to balance Ohio’s budget to defend any state budget cuts: “The reality is we walked into an $8 billion budget deficit. We had to fix that.”

Cuts Hurt Ohio, a website showing cuts to state aid, was launched by Policy Matters earlier this year. That website found $2.88 billion in cuts to state aid with $1.8 billion in cuts to education and $1.08 billion in cuts to local governments. In Hamilton County, that translated to a $136 million cut to education and a $105 million cut to local government.

The report does caution that its findings are “necessarily tentative”: “Projected revenues have come down significantly since the 2009 campaign for the casino proposal, and the expected opening of numerous gambling facilities makes it hard to be sure what revenues will be. We estimate casino tax revenue based on several sources, including state agencies, casino operators, and former taxation department analyst Mike Sobul. Our numbers reflect a comparatively optimistic assessment.”

 
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