Budget to challenge legislators on casinos
Patrick says $124m from fees could fill local aid shortfall
In a challenge to lawmakers to accept his plans to expand gambling, Governor Deval L. Patrick will propose using $124 million of the $300 million that he said could be generated from casino licensing fees to cover a local aid shortfall.
Leslie Kirwan, the state's secretary of Administration and Finance, said yesterday that Patrick has decided against a plan to use the entire $300 million to help close a huge budget deficit and pay for some of his expanded programs and initiatives. Patrick will unveil his budget plan for fiscal year 2009 on Wednesday.
"The governor's budget will not be balanced with this money," Kirwan said in an interview yesterday. She said the $124 million would make up the projected shortfall in the State Lottery, the major source of local aid to already financially strapped cities and towns, and would not be part of the budget's balance sheet. The municipalities had been relying on projections from last year that the Lottery would generate $935 million, but that has been reduced to $811 million.
The governor's proposal prompted a swift rebuke from the House's chief fiscal leader. "Forget the cart - this is putting the entire wagon train before the horse," said Robert A. DeLeo, chairman of the House Ways and Means Committee.
"Moreover, even if this money did become available this year, which is a big 'if,' it may not be there the next year. Then we would have done nothing to really help . . . cities, towns, and property owners," said DeLeo, a Winthrop Democrat.
Still, as part of his move to pressure lawmakers to act on his proposal to license three resort casinos in Massachusetts, Patrick plans to dangle the prospect of $300 million in new revenues before the Legislature as it grapples with a $1.3 billion budget gap. Kirwan said the governor's budget plan will note in his message to the lawmakers that, with legislative approval of his casino gambling proposal in the next few months, the licensing revenue could be available for the coming fiscal year.
The administration would use $176 million of the estimated $300 million by spending $88 million for local property tax relief and $88 million for transportation construction projects in cities and towns.
The prospective use of licensing fees to ease the budget problems has faced a storm of criticism from some fellow Democrats and Beacon Hill budget makers since word leaked out over the last month that the governor might include the revenues in his spending proposal.
His controversial casino plan has met stiff resistance from House Speaker Salvatore F. DiMasi, creating uncertainty about its prospects of winning legislative approval in the near future.
The governor is projecting that the license fees alone could amount to $800 million over the next three fiscal years, in addition to hundreds of millions of dollars from taxes on casino operations and tens of thousands of new jobs.
DeLeo's skepticism that any new revenue from license sale would materialize in fiscal year 2009, which begins this July 1, was echoed by a veteran Beacon Hill fiscal specialist. They note that the Legislature first needs to pass the casino proposals, after which would begin a long and elaborate process for creating the regulatory structure, deciding where the facilities will be built, holding local elections, and setting up the bidding system for the licenses.
"It would be very unlikely to get any licensing fees for this coming fiscal year," said Michael Widmer, the president of the Massachusetts Taxpayer Association, a business-funded fiscal watchdog group. "It would take a Herculean effort."
Widmer disputed the administration's assertion that the $124 million is not being used to balance the budget. He has questioned the administration's fiscal calculations for its casino plans and said Patrick is wrong to include the revenues. "It is not responsible to tie the Lottery aid, the major non-education source of state financial assistance for cities and towns, to casino revenues, which are very unlikely be realized in this budget," Widmer said.
Kirwan balked at the characterization. "This is a real proposal," she said. "There are people who are coming to the Commonwealth who want to pay these licensing fees. We are trying to create a vision of what can be done with that revenue."
The chairman of the Senate Ways and Means Committee, Steven C. Panagiotakos, concedes there is a question about whether the licensing fees could be available for the next fiscal year. But Panagiotakos, a Lowell Democrat who supports legalizing casinos, said the governor is correct in using the budget to push the plan.
"He is being as responsible as many of the other governors who used this sort of tactic in the past," Panagiotakos said. "A governor's budget is as much a fiscal document as it is a political document. The politics here is that he is trying to drive this issue further down the field in order to get it to a legislative debate."
Stephen P. Crosby, the dean of McCormack Graduate School at the University of Massachusetts at Boston, also said Patrick was showing that he is learning how to manage the politics of Beacon Hill.
"This is pretty shrewd," said Crosby, a former administration and finance secretary in the Cellucci administration. "This is 'put up or shut up' pressure on the Legislature and on the interest groups like the Taxpayers Foundation that want all the services and expensive programs but are desperately opposed to closing corporate loopholes or are critical of casino money." 