and the
Citizens Economic Research Foundation

Barbara's Column
September #3

Reform should come before new taxes,
tolls or casinos
by Barbara Anderson

The Salem News
Thursday, September 20, 2007

The Massachusetts Transportation Finance Commission was appointed in 2004 to address the state's infrastructure needs. And Gov. Deval Patrick has been thinking about the casino issue since his inauguration.

So the commission and the governor release their findings on closing the transportation funding gap and casino gambling, respectively, at the exact same time Monday afternoon.

A coincidence? Apparently not. Our choice is supposed to be: Casino gambling, or a huge gas-tax increase, more tolls, and mandatory GPS tracking of our every driving mile.

Keep in mind that unless we all become compulsive gamblers, the casinos will not generate the billions the commission says is needed for infrastructure repair and maintenance - especially since Gov. Patrick also wants to spend part of the gaming revenue on property tax relief, more police to deal with a gambling culture, local aid to offset a potential loss in lottery revenue, and programs to help people deal with their gambling addictions.

Before everyone gets all excited about his "property tax relief" pledge all over again, we need to see how that will work, exactly.

The initial proposal is for a property tax credit for people who pay 2.5 percent of their income or more in property taxes. Will our local tax collector need our income tax forms?

Meanwhile, the Transportation Finance Commission is recommending: an increase in the gas tax, initially from 23.5 cents to 35 cents a gallon, then annual increases to account for inflation; increased and inflation-adjusted MBTA fares; new tolls; and something called "direct road-user fees." And, here's the good part: 22 reforms including the end of police details on state road and bridge projects, and changes in transportation employee pensions and health-care benefits which are currently, according to the commission, "the most generous in the country".

The report ends with "a call to action. These recommendations need to be discussed and debated. We encourage the citizenry either to accept these steps or to offer other measures equal to the task."

OK. We accept the reform steps first. Right now, pass and sign into law legislation ending the police details and extraordinary benefits. Throw in similar reforms on these issues at the local government level.

Then we can talk about the other steps. When the reforms are passed, it will be easier to determine the amount of new revenues actually needed for our infrastructure problem. It will also be easier to listen to a governor and legislators who finally stood up to the public employee unions on behalf of the taxpayers. They need to fear us voters more than they fear the unions.

When you are told that the tax hike must be passed immediately, keep this in mind: The last time there was a major gas-tax increase for the crumbling infrastructure, most of the money was diverted by the Dukakis administration to other state programs, which is why we still have the crumbling infrastructure.

In the summer of 1990, the legislation that "froze" the income-tax rollback, decreased the personal exemption, and created a tax on sick, elderly people in nursing homes, also increased the gas tax. Of that amount, $120 million was appropriated directly to the state public works department to be used to leverage federal matching funds for road and bridge projects.

The January/February 1991 update from the American Automobile Association complained that after "a dazzling series of cuts, transfers and reallocations - not to mention 'freezing' $89 million to help offset the (state budget) deficit - only $7.4 million of the original $120 million remained. The state now says that since it no longer has the cash, it'll have to borrow the money needed for roadwork."

The lesson learned from history, drivers: Don't believe politicians who tell you that you must pay more at the pump "for the infrastructure." You can't ever get a guarantee that the money won't be diverted, but this year at least, you can demand reforms in the transportation system before you roll over for the tax hike.

The governor is now telling us that allowing three casinos will cancel the need for new taxes. But the math doesn't work, so we need to discuss the casino issue separately from the infrastructure issue.

This is much harder. Citizens for Limited Taxation, for instance, had no problem determining its "reform first" position on the Transportation Finance Commission's recommendations. But our three directors have conflicting opinions on casino gambling.

Chip Faulkner is opposed, arguing that all the worst aspects of the gambling culture are guaranteed to thrive in Massachusetts. Chip Ford takes the libertarian position that the government has no business forbidding the gaming business from operating anywhere it owns land, and the practical position that there's no point in letting gambling money go to Connecticut when we could keep the money here. I sit in the middle, undecided, which doesn't happen often.

Returning to the "reform first" theme: I'd like to see reforms related to this issue, too, reassuring concerned citizens about the societal impact of casinos. We'll need tougher drunken driving laws; police taken off special details and assigned to vice squads; judges who are tougher on criminals; and a government commitment to the concept of personal responsibility. Then we'll talk.

The Salem News
Thursday, September 20, 2007

Done right, casino gambling can fund road repairs,
allow property tax relief
By Deval Patrick

For weeks I have carefully considered whether we should expand gaming in Massachusetts. After thoroughly reviewing the arguments and the analysis on both sides of the issue, I believe authorizing three resort casinos will have significant economic benefits to Massachusetts.

Done the right way, resort casinos can play a useful part, along with other initiatives in life sciences, renewable energy and education reform, in providing our commonwealth with sustainable, long-term economic growth.

Three high-quality, resort casinos would generate over $2 billion annually in new economic activity, bolster tourism to the Bay State, create over 20,000 permanent new jobs at good wages and benefits, and engage the services of over 30,000 construction workers. That kind of economic activity spurs the sale of other goods and services, creating a jobs multiplier effect within our local economy.

Economic growth is critical in order for us to deal honestly and responsibly with the neglect of the past 16 years.

Our roads and bridges need billions of dollars of repairs and ongoing maintenance. We must reform our education system to prepare young people for the competitive challenges of our global economy, and continue to position Massachusetts for the jobs of the 21st century. And we must accomplish all this without putting an unfair burden on those in our community who have been hit hard by rising property taxes over the past few years.

The only way to meet these responsibilities fairly and equitably is to advance initiatives that will provide long-term, sustainable economic growth. Destination resort casinos can serve a useful role in our overall economic development plan.

I did not come to this decision lightly. If we proceed down this path, we must ensure that we adhere to sound economic, public safety and public health principles, as well as develop a strong oversight and enforcement mechanism for casinos.

To that end, we will limit the number of casinos to three, and ensure that they are destination resort casinos and not "racinos." The fewer the number, the more likely we are to maximize their economic benefits and tax revenues. At the same time, it is important to allocate these opportunities equitably around the commonwealth in order to attract tourists and residents from different regions of New England and beyond.

We will also regulate resort casinos professionally and independent of politics. The auctioning of the casino licenses must be an open and transparent process, overseen by financial experts and free from any political interference. Oversight and regulation of resort casinos should be entrusted to an independent authority, while enforcement should be the responsibility of a new division within the Attorney General's office. All costs related to regulation and enforcement will be born by an assessment on the casinos themselves.

We will also provide significant resources to mitigate any anticipated social costs. Specifically, we will set aside a portion of the casino revenue in a separate trust account for programs to prevent and treat compulsive gambling, drug and alcohol abuse, and other related public-health concerns, so that we can address and monitor the impact on people for whom gambling is more than harmless entertainment. I have asked my secretaries of Health and Human Services and Public Safety to design best-in-the-nation programs to address these issues, and the percentage of gaming revenues dedicated to supporting these programs will be among the highest of any in the country. In addition, we will also set aside a portion of money for host and surrounding communities who bear the burden associated with any significant increase in people and traffic.

Finally, we will dedicate the revenue from resort casinos toward repairing our roads, rails and bridges, as well as toward a significant property tax credit program for homeowners.

Our roads, rails, buses and bridges are showing the effects and results of over 16 years of neglect by previous administrations. Without better and safer roads and bridges, we compromise our economic future and our quality of life. By investing a significant portion of the resort casino revenue toward improving roads, we accelerate the growth in economic opportunities in every region, ensure the safety of our public roads and bridges, and address effectively one of the greatest fiscal challenges we face - without an increase in the gas tax.

The remaining resort casino revenue will be distributed to homeowners across the state in the form of an income tax credit to offset property tax bills. Families, seniors and young people trying to settle in our state face rapidly escalating property taxes. Indeed, these new resources provide us the opportunity to deliver property tax credits directly to homeowners and thereby help to lessen the burden of property taxes on working families in the commonwealth.

Needless to say, our way forward does not and should not depend on the governor's views alone. The Legislature will have to enact new laws to make this vision a reality. The needs and wishes of affected communities must be heard. No resort casino should be sited before receiving a transparent, engaged public review.

If we proceed under these conditions, with care and transparency, I believe destination resort casinos can bring significant economic benefits to the commonwealth, and become a part of our overall plan for long-term, sustainable economic growth. Done the right way, resort casinos can become one of the many reasons why Massachusetts is an international destination for travelers and tourists, and a wonderful place to live.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and Eagle Tribune, and often in the Newburyport Times, Gloucester Times, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence (RI) Journal and other newspapers.