Dan Haar: One-Time License Fee For East Windsor Casino Is State’s Latest Budget Football

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Dan Haar: One-Time License Fee For East Windsor Casino Is State’s Latest Budget Football

In the mad rush to pass a casino bill, lawmakers glossed over one detail that could have a big effect on the state budget.

The General Assembly didn't fully debate and resolve whether the state would charge the Mashantucket Pequots and Mohegans a one-time fee to open a casino in East Windsor. Figures as high as $250 million and as low as $25 million, or perhaps zero, were bandied about.

The final bill contains no payment for the exclusive right; a companion bill includes a $30 million advance from the tribes to the state.

Now the fee is back in play as an element of the ongoing, closed talks to eliminate a $2.3 billion shortfall in the fiscal year that starts in less than three weeks.

"The subject of a licensing fee remains an open question and I believe it should be a matter of discussion during budget negotiations," said Senate President Pro Tem Martin Looney, D-New Haven, in a written statement Tuesday.

Is that a fair way to do it, after the bill was adopted? Maybe not. But it's how public budgets happen for all sorts of taxing and spending issues.

On May 24, hours after the Senate passed the casino bill, House Democrats said a fee would appear in their version. "The bill that passed the Senate cannot pass the House," Majority Leader Matt Ritter, D-Hartford, said at the time.

House Speaker Joe Aresimowicz explained that the exclusive right to own and operate the state's first casino off tribal land "is worth something to the bidding process." One version of the House bill pegged it at $250 million.

Ritter reiterated Tuesday the right to open a new casino "should have a price tag associated with that...all things are still possible for the budget."

In the end, the House passed the Senate's version of the bill after 1 a.m. on the last day of the session, June 7. With the casino's two main supporters being Senate Democrats, and with many Republicans opposing a one-time fee, it's not clear that a bill requiring a payment would have passed.

The tribes, operating as MMCT, a joint venture, agreed to pay the state 25 percent of both the slot machine and table games revenue, an amount that's expected to total $60 million to $70 million a year. The $30 million advance would be deducted from those payments after the casino opened — assuming Gov. Dannel P. Malloy signs the bill, as expected, and the development happens as planned at an abandoned former Showcase Cinemas site.

Some lawmakers oppose the fee because the tribes have already paid the state $7 billion since the historic compacts of 1992 and 1996, paying 25 percent of slot revenues. That totaled more than $400 million in 2006 and is expected to be $267 million this year.

Some also oppose the fee because they see it as a tax increase on a large employer.

"Connecticut is considered one of the best deals with local tribes, and on top of that, they have been paying other ancillary costs," said Sen. Cathy Osten, D-Sprague, whose district includes Foxwoods Resort Casino and Mohegan Sun.

Osten, who is in the budget talks as co-chair of the appropriations committee, said levying a one-time fee "would be like saying to Sikorsky, 'We're not giving you a tax break, we're going to charge you more.'...They're a business that should be treated as fairly as any other business in Connecticut."

Casino operators routinely pay states a large fee for the right to operate commercial gambling with limited competition. MGM Resorts International, which continues to fight the East Windsor plan in court, saying it was denied a chance to bid on a Connecticut casino, paid Massachusetts $100 million for MGM Springfield.

The MMCT fee flap is all the stickier now that the bill has passed. If we don't have a budget within a month or so, Malloy might have to sign the casino bill into law before a fee is even enacted.

"The two tribes already have exclusivity in the market and they've paid more than $7 billion for it," said Andrew Doba, a spokesman for MMCT.

Malloy didn't include casino fee revenues in his budget because he neither supported nor opposed the casino expansion plan. But a fee of, say, $100 million would seem to fit his philosophy, if we look at his hospital tax — a large levy based on revenues, not profits, against large businesses that cannot exit Connecticut.

There is no fair way to produce a budget with revenues that fall short of current expenses by 10 percent at a time when we can't raise taxes on super-rich residents for fear they will leave. The way it stands now, state employees, who account for only about one quarter of the budget, would give back $1.5 billion over two years, about a third of the shortfall, in the form of forgone raises and pension and health changes.

Thousands of families making 1.5 times the poverty rate would be thrown off Medicaid; programs for the arts and children would end; towns would lose millions of dollars in aid; and some hospitals struggling to stay open would now have to pay local property taxes in addition to a state revenue levy.

The bill gives the tribes a right to build a casino at an estimated cost of $200 million to $300 million — not because that's where a casino is needed but for the sole purpose of picking off MGM Springfield customers on their way up I-91. As it happens, that strategy will save some Connecticut jobs and produce revenue for the state.

It would not be fair for budget negotiators to tack on a fee after the General Assembly passed its bill. But forgoing a fee would force more painful cuts in the budget, cuts that also aren't fair.

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