New Illinois casinos could bust Indiana's budget

2013-05-04T00:00:00Z 2013-10-14T15:23:12Z New Illinois casinos could bust Indiana's budgetDan Carden dan.carden@nwi.com, (317) 637-9078 nwitimes.com
May 04, 2013 12:00 am  • 

INDIANAPOLIS | The ink is barely dry on Indiana's two-year state budget legislation, but the potential for new Illinois casinos is threatening to throw the Hoosier spending and tax cut plan out of balance.

The Democratic-controlled Illinois Senate voted 32-20 Wednesday for Senate Bill 1739 permitting new casinos in Chicago, the south suburbs and three other cities; slot machines at horse racing tracks and the two Chicago airports; and a reduction in casino tax rates.

The gaming plan, which now goes to the Democratic-controlled House, is strongly backed by Chicago Mayor Rahm Emanuel, who has pledged to give schools all the revenue from the Chicago casino.

That land-based or lakeside gambling hall is set to have 4,000 slot machines and table games seats — about the same size as the Hammond Horseshoe, the largest Indiana casino.

Even Democratic Illinois Gov. Pat Quinn has signaled his tentative endorsement so long as stringent ethics standards remain in the proposal. Quinn vetoed two prior Chicago casino plans because of ethical concerns.

Legislative supporters claim new casino licenses will produce one-time fees of $1.2 billion for Illinois. New annual gaming tax revenue is projected to total $268.9 million.

Much of that money is certain to come from Illinois residents who currently gamble at casinos in Hammond, East Chicago, Gary and Michigan City.

The nonpartisan Indiana Legislative Services Agency estimates that nearly 70 percent of region casino-goers live outside Indiana.

Hoosier lawmakers did not account for the expansion of Illinois gaming when crafting House Bill 1001, Indiana's 2014-15 state budget, which takes effect July 1, 2013. It provides for $30 billion in state spending over two years along with $1.1 billion in tax cuts.

The Indiana budget currently is balanced, with projected revenues exceeding spending by approximately $100 million in each year.

However, the budget is likely to drop into deficit status if Illinois goes ahead with its casino expansion plans and projections of Illinois gaming tax revenue prove accurate.

Indiana budget writers chopped $70 million a year from their estimates of state gaming tax revenue because of the recently opened Cincinnati casino, which is half the size of the proposed Chicago casino.

Add in the Cincinnati-sized casino proposed for the south suburbs and a second casino of that size near the Indiana border in Danville, Ill., and Hoosier tax losses from Illinois casino expansion could easily top $100 million and produce a budget deficit in Indiana.

The spokeswoman for Republican Indiana Gov. Mike Pence did not return a request for comment. Pence opposes any expansion of gaming in Indiana, including moving casinos onto land from their permanently moored boats.

House Speaker Brian Bosma, R-Indianapolis, has not commented directly on the potential budgetary impact of Illinois gaming expansion, but recently told reporters he's comfortable with gaming taxes becoming a smaller piece of Indiana's revenue pie.

"We've lived off of that largess for quite some time with the knowledge that at some point the surrounding states would catch up. So I'm prepared for that," Bosma said. "I feel we're invested as far as we need to be in that industry."

Even if new Illinois casinos force Indiana into spending more money than it takes in, Indiana has a $2 billion budget reserve to dip into and the budget legislation authorizes Pence to re-prioritize state spending in a deficit situation.

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