Kasich tells legislature not to spend his new racetrack slots revenue

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Governor’s Kasich’s budget director, Tim Keen, testified in Conference Committee yesterday and provided revised revenue estimates for fiscal years 2011, 2012 and 2013. In short, there is a lot more money to play with, but Keen and Kasich are hedging, telling legislators, essentially, don’t think you can go spend it because we already have plans for it. More on that later.

One major source of new revenue that wasn’t part of Keen’s prepared testimony, but came up with reporters after the hearing was Kasich’s announcement yesterday that the state would go forward with video slots at racetracks. That deal will apply a 33.5% tax rate against $1.266 billion per year in revenue. The deal also requires track owners to pay $350 million over the first two years to get into the slots game. Our math suggests this adds, at minimum, $750 million to the biennium, if you assume it takes the tracks a year to get their gaming operations up and running.

But Keen says to legislators, essentially “don’t spend that money yet,” explaining that we can’t really count on it so we should wait to appropriate it at some later date. What does he mean?

Do they think their own deal is going to fall through?

Do they think there will be lawsuits such as confronted Governor Strickland to stop Lottery expansion? Funny because most of the people behind the last challenge (Let Ohio Vote) now work for the Kasich administration and can safely be assumed not to sue him.

Or would they just prefer to keep that money in their back pocket so that Kasich can announce a tax cut sometime in a year or so as he prepares to gear up for re-election? If that’s true, they’re essentially telling legislators in the meantime: “yeah sorry about cutting your local school district and local governments, resulting in huge tax increases at the local levels that your constituents will be pissed off about, but we’re going to hang onto the money for now. Hey, good luck in those elections next year!”

We’ll keep watching, but had to ask the question. What does everyone else think?

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1 Comment

  1. Have you noticed the very generous tax amnesties in the Senate version of the Budget Bill? There is a general tax amnesty (temporaty law section 757.40) for most taxes that would run next year. This amnesty seems fairly normal (waive penalty and 1/2 the interest).

    The other, section 757.42, is for use tax only and is VERY generous. The amnesty will run for 2 YEARS and it will forgive all use tax liability incurred prior to 2010. This kind of state tax amnesty is unheard of and unprecedented. It is coupled with an amendment to Revised Code Section 5703.58 which would prohibit any assessment of use tax liability incurred prior to 2008 (even if the business did not participate in the amnesty).

    This can amount to a huge tax break for scoflaw businesses that have been avoiding paying the proper sales and use tax on their taxable purchases.

    Was this amnesty ever discussed in open committee?

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