Illinois casinos hit with higher taxes

Monday, June 2, 2003 | 11:11 a.m.

SUN STAFF AND WIRE REPORTS

Illinois lawmakers, voting mostly along party lines, approved Gov. Rod Blagojevich's plan to balance the budget through increased fees and taxes targeting casinos and other businesses Saturday.

Lawmakers meeting in Springfield approved more than $1.8 billion in new revenue by voting to raise fees, end tax exemptions, sell state buildings and dip into special government funds before a midnight deadline would have made legislation more difficult to pass.

Blagojevich said although the revenue decisions were not easy, they were necessary to provide more money for priorities such as education and health care without raising taxes or slashing other spending.

"I believe in this budget," the Democratic governor said. "I believe that this budget offers us a way to solve the worst fiscal crisis in Illinois history."

Democrats, who control both houses of the Legislature, plowed ahead with his plan to fill the roughly $5 billion budget deficit, despite staunch opposition from most Republicans and their allies.

"I don't understand why we continue to cut the throat of business," Rep. Terry Parke, R-Hoffman Estates, said.

Hoping to take advantage of a dormant resource, lawmakers voted to create a replacement riverboat casino license that could be auctioned off to generate money. It would replace a license now owned by Emerald Casino Inc. but not being used because of legal battles and bankruptcy.

The legislation would make it possible for the state to bid on the license and possibly operate a casino.

Businesses fought vigorously against the higher fees and the elimination of tax exemptions. They and their legislative allies argued the changes would drive jobs out of state, harming the economy.

Supporters said that criticism was unwarranted.

"Obviously no one is happy to give away a goody that you used to have, whether you ought to have had it fairly or not," Rep. Barbara Flynn Currie, D-Chicago, said.

The House voted 62-53 on Friday to raise taxes on riverboat casinos as high as 70 percent to pump $200 million into the state treasury. The Senate approved the measure Saturday by a vote of 33-24, Reuters reported.

Casinos would have to pay the state 70 percent of any revenue above $250 million a year, up from the current top rate of 50 percent. Supporters say this would affect only three casinos, the most successful of the state's nine riverboats. Those three are in Aurora, Elgin and Joliet, the St. Louis Post-Dispatch reported.

"Making 30 percent of a dollar is still better than not making any," Rep. Jay Hoffman, D-Collinsville, said.

The middle tier of casinos would see their taxes jump to 50 percent, up from about 35 percent, depending on their exact revenues. The higher taxes would expire after two years or when a 10th casino opens in Illinois.

Supporters say scaling back the new tax rates after the 10th casino opens will encourage the gambling industry to embrace that new boat, whose sale Blagojevich expects will generate $350 million for state coffers next year.

The bill also would increase the $3 fee the state charges casinos for each customer, to $5 for the most popular boats and $4 for the rest.

Some lawmakers warn that the increase will not produce the money Blagojevich predicts and will lower the value of the license now tied up in legal battles.

Rep. Lou Lang, a Skokie Democrat who proposed expanding gambling to help the state's budget woes, argued casinos will reduce their operating hours to stay below the higher tax threshold. That will mean fewer jobs, he said.

"I think there's going to be a price to pay for this that goes way beyond gaming, goes way beyond casinos," Lang said. "It has to do with economic development in our state, job creation in our state and the future revenue picture of our state."