Panel OKs higher Detroit casino tax

David Eggert

Wednesday, Aug. 4, 2004 | 9:23 a.m.

LANSING, Mich. -- The tax on Detroit's three casinos would go up by one-third under a compromise reached Tuesday evening by a legislative committee.

In a hastily called meeting on primary election day, a House-Senate conference committee approved raising the tax on the casinos from 18 percent to 24 percent. It closely mirrors an increase approved by the Senate and is significantly less than the hike to 36 percent approved by the House.

The full House and Senate were expected to vote on the bill today when both chambers returned to the state Capitol after a two-week break.

Senate Majority Leader Ken Sikkema, a Republican, said Tuesday he's confident the Senate has the 29 votes, or three-fourths of the 38-member chamber, needed to approve the bill because it amends a voter-approved initiative that created the three Detroit casinos.

However, Republican House Speaker Rick Johnson said he's not confident there will be enough support for the bill in the 110-member chamber where there is one opening. The bill needs 82 votes to win approval in the House.

Failure to compromise on the higher casino tax until Tuesday has held up negotiations to balance the budget for the upcoming fiscal year, which is projected to be $1 billion in the red.

Lawmakers have looked at the higher tax on Detroit's three casinos -- MotorCity, MGM Grand and Greektown -- to help resolve the budget deficit.

"If this isn't the answer, what is?" Sikkema asked.

The casinos have said the higher tax would cost workers their jobs and stunt Detroit's economic development.

"When Michigan voters approved Detroit's casinos, they expected job growth and economic development. This bill is just the opposite," said Bruce Dall, chief financial officer of Greektown Casino.

Only Republican Rep. Larry Julian voted against the compromise. He introduced legislation that would allow horse tracks to install slot machines and other electronic gaming devices.

Julian and some other supporters of the so-called racino legislation, including Johnson, haven't been willing to sign off on a compromise for the higher casino tax, fearing they would lose leverage to win approval for the so-called racino bill.

"Let's go all the way," Julian said, arguing the Legislature should pass the racino bill to help Michigan's agricultural community.

The compromise on the higher casino tax approved by the conference committee on Tuesday includes a provision that would scrap the increase if horse tracks are allowed to install the video lottery machines. It also includes an incentive for the Detroit casinos to build permanent hotels.

"It's a fair way to address this because the casinos would then face competition," Sikkema said.