Bold Budget Not as Bold as It Seems?
Deval Patrick released his second budget yesterday – one that’s powered in large part by new corporate taxes that haven’t been approved and licensing fees from casinos that don’t yet exist. It’s a highly provocative document that dares the legislature to quit stalling and either enact his agenda or find something better, and it’s sure to only escalate the recent spate of sniping and name-calling on the Hill.
But as daring as Patrick is in bundling his tax and casino proposals into his budget, the governor is also, quietly, hedging his own bets. It’s as if he’s afraid his worst critics might actually be right.
Asked why the governor would only put $300 million of casino money in play this year, rather than the whole $800 million it says it expects, Patrick’s chief budget-writer, Leslie Kirwan, said she didn’t want the state to be over-reliant on casino money in its budget. As she plied grateful reporters with free pizza in a State House conference room, she talked about $300 million a year as being a reasonable figure for “creating discipline” when dealing with all this awesome new free money.
It was hard to listen to Kirwan and not think about yesterday’s Herald story, though. The paper reported that Detroit’s three casinos were experiencing sluggish growth, underperforming by half a billion dollars a year, and leaving a trail of broken promises and shuttered businesses in their wake. Reading the piece, and seeing the Patrick administration hold the reins on its own vast casino spending ambitions, it was hard not to suspect that the administration isn’t setting up the state to cope with crushing disappointment when Patrick’s casino proposal goes belly-up.
There may be good reason for such suspicions. Back in October, the Massachusetts Taxpayers Foundation estimated that by the time Massachusetts’s three casinos would come online, as much as two-thirds of the untapped demand in New England’s gaming market will have been met by broad expansions at Connecticut and Rhode Island gambling halls.
The administration is assuming that its three new casinos will generate $2.05 billion in gambling business, but, the foundation warned, “Getting to $2.05 billion in a nearly saturated marketplace would be an extraordinary accomplishment; even reaching $1.5 billion would be no small feat.”
The Taxpayers Foundation report also found that Patrick was overplaying his hand when he promised $400 million a year in casino money for transportation and property tax relief. Anemic growth of the state’s lottery will likely leave Patrick with less money to toss around than he has claimed.
Even assuming his optimistic $2 billion scenario plays out, the state would only have $300 million a year, not $400 million, to spend on new roads and tax credits. The less sanguine estimate of casinos doing $1.5 billion a year in business, would only leave $186 million a year – more than half what Patrick predicted – in the kitty.