New Orleans faces cut in funding if casino tax chopped

Wednesday, Oct. 4, 2000 | 10:53 a.m.

So far, there is no indication of when state lawmakers might take up the tax issue. The casino says it will close March 31 unless it gets a reduction in its $100 million annual minimum gambling tax.

But last week, the Joint Legislative Budget Committee approved a measure that will cut the state's payment to the city by the same proportion of any gambling tax reduction.

City officials say they already are providing services to the casino at a loss. The state currently provides $6 million a year out of the $100 million tax. At the current rate, city services will cost $10 million, said Cedric Grant, the city's acting chief administrative officer.

If the Legislature adopted a flat 18.5 percent tax rate - the same that Louisiana's riverboat casinos pay - that would likely translate into a tax break of more than 50 percent.

So far, Gov. Mike Foster has said he will not consider a special legislative session until there is a widespread consensus. Many key lawmakers say that the casino's owner, JCC Holding Co., will have a tough time selling a tax cut.

Also at issue is whether the Legislature should lift the ban on the casino having its own hotel and severe restrictions on food services inside the gambling hall.

The budget committee's action still must be approved through mail balloting of House and Senate members.

"If the state's got to take a reduction, so should the city," said Rep. Hunt Downer, D-Houma, a committee member.

For example, if the state tax was cut by half, that would reduce the state's payment to the city from $6 million to $3 million. The city now spends $10 million, far lower than the $18.6 million Mayor Marc Morial asked the state to provide in 1999.

"What we'd have to do is go back and reprogram those services and provide what we can, which would be greatly reduced from what we have now," Grant said.

Legislators said the city has other sources of money to pay for support services, including the $12.5 million paid each year by JCC Holding for the city-owned casino site.

Roy Rodney, an attorney for the Rivergate Development Corp., the city agency in charge of the casino property, said JCC Holding is not seeking a rent reduction.

Casino officials have declined to comment on specific negotiating points.