Michigan Senate could reconsider casino tax

David Eggert

Monday, June 28, 2004 | 8:51 a.m.

LANSING, Mich. -- As smokers and the tobacco industry prepare for a higher cigarette tax, casinos are fighting to make sure they aren't targeted next.

The state Senate could reconsider legislation this week that would increase the state tax on Detroit's three casinos.

Earlier this month the Senate rejected, 19-18, a House-approved bill that would have doubled the casino tax rate, from 18 percent of their gambling revenue to 36 percent. But Senate Majority Leader Ken Sikkema told reporters last week that a higher casino tax should be part of the budget for the fiscal year that begins Oct. 1.

Sikkema said the Senate could vote on a more "modest" tax increase, but declined to be more specific.

The casinos -- Greektown, MotorCity and MGM Grand Detroit -- business groups, organized labor and Detroit lawmakers staunchly oppose any tax increase on gaming.

"It is unfair and economically unwise," Roger Martin, spokesman for Greektown Casino, said.

Martin said the casinos would lay off thousands of their 8,100 employees if a tax increase is approved. If the tax increases significantly, the casinos wouldn't build permanent structures, he said.

The casinos currently are barred from expanding at new, permanent locations until the courts resolve a lawsuit by an Indian tribe that questioned the way Detroit's casino franchises were awarded.

The Senate Fiscal Agency estimates that doubling the wagering tax would raise $220 million to help balance the budget. But Democratic Gov. Jennifer Granholm has not included a casino tax increase in her budget proposal. Rather, she proposed increasing the tax on liquor and tobacco and continuing an estate tax on wealthy individuals.

A 75-cent per pack cigarette tax increase will take effect Thursday. But both the House and Senate have voted down Granholm's liquor and estate tax bills.

One factor working in favor of the gaming industry is a requirement that three-fourths of both chambers vote for a casino tax increase because it would amend a 1996 voter-initiated law.

Gaming tax revenue from the Detroit casinos brought in about $91 million for the state and more than $110 million for the city last year. The three casinos have about $1.1 billion in combined waging revenue each year.

Sen. Buzz Thomas, D-Detroit, said increasing the casino tax is "absurd," especially at a time when the Legislature is attempting to create new jobs statewide.