At a time when businesses large and small are still struggling to recover from nearly three years of economic doldrums, a special tax break to boost casinos was always going to be a hard sell to the public. It just didn’t seem right.
So while we understand the legal rationale for the Colorado Limited Gaming Control Commission’s decision several weeks ago to reduce casino taxes, we also appreciate why the action so infuriated Gov. John Hickenlooper that he replaced all five members of the panel this week.
The core of his message was unmistakable: We’re all equals in these challenging economic times.
“We don’t believe the Colorado gaming industry should be judged reasonably unprofitable or unhealthy at a time when some casinos are making major multimillion-dollar investments in one of the worst economic periods in our nation’s history,” Hickenlooper said.
“Colorado casinos pay among the lowest tax rates in America, and to lower them even further in these times of unmet needs in local communities makes it appear they are diverting their fair and rightful obligation onto their neighbors in the rest of the state.”
To be fair to the commissioners who were sacked or whose terms expired, they were merely attempting to follow state law when they lowered the casino tax by 5 percent. After all, they’re supposed to “permit the licensed operator a reasonable profit after expenses,” not to mention “encourage business growth and investment in the gaming industry.” And the gaming industry has had a comparatively rough spell. It lost $18 million in 2008 and millions more in 2009 and 2010, and was braced for a lackluster 2011 as well.
But Hickenlooper pointed out that the evidence on the health of the casino industry does not all point in the same direction. Not all of the industry is suffering, for example, or pessimistic about its prospects. The state’s biggest casino, Ameristar in Black Hawk, boosted revenues by nearly 50 percent in 2010, according to published reports, and new casino projects have been announced as well.
Just this week, Central City approved a liquor license for the Crystal Palace Casino, an establishment that still needs state approval.
Of course, it isn’t only a disputed legal interpretation that’s behind the clash between the gaming commission and governor. Taxes from casino revenue in 2010 funneled nearly $100 million into the coffers of local governments, historic preservation, community colleges and other beneficiaries. And given how state and local governments have cut spending for several years now, the gaming industry’s taxes appear more valuable than ever.
Even though the governor took decisive action, it’s important that the former gaming commissioners not be cast as dark hats in this drama. They acted in good faith and adopted a defensible interpretation of the law — as the governor’s office has been careful to acknowledge from the outset. “There are times when good people disagree,” Hickenlooper spokesman Eric Brown said at one point.
There are also times when good people have to go.
