Lawmakers move to cut Harrah’s tax, allow dockside gambling

Melinda Deslatte

Wednesday, March 14, 2001 | 10:57 a.m.

BATON ROUGE, La. -- A Senate committee takes the next look at a proposal to raise the tax on riverboat casinos for the permission to remain dockside after legislators in the House overwhelmingly approved it.

The House bill, approved 82-19 Tuesday, was pushed by Gov. Mike Foster, who is touting a measure to give teachers a $2,000 raise. It required 70 votes to pass. While it moves to a Senate committee, the full Senate is scheduled to take up the New Orleans land-based casino bill Wednesday.

The Senate's Revenue and Fiscal Affairs Committee narrowly approved a tax cut to Harrah's casino that would keep the casino, with its 3,000 employees, from shutting down March 31. Senators approved the measure in a 5-4 vote.

The money from both bills would provide pay raises for school teachers and university professors.

"This is the main reason why we're here at the special session," said Rep. Edwin Murray, D-New Orleans, one of the sponsors of the dockside bill.

Murray said riverboat casinos would pay the extra money to go dockside -- an estimated $54 million total -- because they could add more amenities and attract more customers.

Rep. Tony Perkins, R-Baker, argued that the tax increase creates 16 land-based casinos. Perkins said voters who approved riverboat casinos didn't agree to dockside gambling.

Under the proposal, boats that want to continue cruising would pay the current tax of 18.5 percent of gross revenue. Those that want dockside would pay 21.5 percent. Those wishing to change from boats to barges would pay 23.5 percent.

Narrowly defeated Tuesday was a proposal that would have forced Shreveport-area boats to pay 21.5 percent even though they are docked because of the shallowness of the Red River.

Some legislators said they were concerned that keeping the five Shreveport-area boats at an 18.5 percent tax rate while they stay dockside could create a legal problem for the state.

Foster said Tuesday that could be a problem, "but we can come back and fix it in another special session."

Although the New Orleans casino measure would cut the casino's minimum $100 million tax in half, it would actually make money available for teacher pay.

That is because the casino -- owned by JCC Holding Company and operated by Harrah's Entertainment Inc. of Las Vegas -- has only guaranteed payment of the tax for one year at a time.

By law, the state cannot use money for yearly operating expenses -- such as teacher salaries -- unless it is going to be available every year. One-time money can only be spent on debt retirement or for construction.

The bill will require the casino to guarantee funds for an initial four-year period, with periodic extensions to ensure the state will always have three years' notice before the money could be shut off.

The new tax money -- $50 million in the first year and at least $60 million in future years -- can be labeled as recurring and used for teacher pay.

Even with the guarantee, there is nothing that says the casino will not shut down again, opponents said. The casino has gone to bankruptcy court twice since it first opened in 1995.