Part IV in a Series

Casino taxes still important to state's finances

2013-12-25T00:00:00Z 2013-12-25T22:48:06Z Casino taxes still important to state's financesBy Dan Carden, (317) 637-9078
December 25, 2013 12:00 am  • 

INDIANAPOLIS | New competition from neighboring states has taken a significant slice of Indiana's gaming revenue, but state taxes on casino wagers and admissions remain an important component of Indiana's overall financial picture -- as they have since 1996.

Slot machines at Illinois bars and restaurants, tribal casinos in Michigan and Ohio's state-licensed casinos and horse track casinos, commonly known as racinos, combined to shrink Indiana's gaming revenue to $752 million during the 2013 budget year that ran from July 1, 2012, to June 30, 2013.

That's a drop of $77 million from 2012 and the lowest total since 2002, when Indiana had one fewer casino and neither of the state's two racinos had opened.

Nevertheless, gaming taxes still contributed some $560 million to the state's general fund, which pays for schools, roads, assistance for low-income Hoosiers, state parks, state employees and nearly all other state-funded services.

That's 4 percent of the state's budget, and about half that money originated in the five Northwest Indiana casinos.

In comparison, the inheritance tax -- which lawmakers this year eliminated retroactive to Jan. 1 -- brought in $165 million a year. Without gaming revenue to backfill that tax cut, the burden might have been shifted onto other taxpayers, or vital services could have been reduced.

About $100 million in state gaming taxes was distributed last year to the Build Indiana Fund, which mostly is used to reduce the vehicle excise tax Hoosiers pay each year when renewing their license plates.

The Build Indiana Fund also prepays some of the state's share of employee and teacher pensions, reducing the need for future diversions from the general fund.

Approximately $50 million in casino admission tax revenue went to support mental health programs, the Indiana State Fair and the state's horse racing industry.

Since casino gambling was legalized in 1996, the state's general fund has received more than $2 billion in gaming tax revenue. An additional $2.7 billion was used to reduce local property taxes prior to the imposition of state property tax caps.

The Build Indiana Fund, whose revenue also includes profits from the Hoosier Lottery, legalized in 1989, has received more than $7 billion.

Besides excise tax cuts and pension funding, that money has paid for state and local projects across Indiana, ranging from Little Calumet River levees, to new buildings at state universities, to upgrading public television stations for digital broadcasting.

The task of ensuring that Indiana's casino industry continues to contribute to the state's bottom line now rests in large part on state Rep. Tom Dermody, R-LaPorte, new chairman of the House Public Policy Committee.

After years of inaction on proposals such as land-based gaming, the Republican-controlled General Assembly in 2013 awarded casino owners some tax relief in exchange for promised upgrades to their properties.

Dermody said he plans to work with industry leaders when the Legislature convenes next month to find ways for the state and casinos to continue to win with gaming.

"(We need to) have difficult discussions about how we allow gaming to continue in Indiana and be as competitive as possible," Dermody said. "Because one thing I think for sure, just doing nothing, we're not going to stay at the same level we are now."

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