State may tax legalized bingo establishments
Published 4:11 am Wednesday, February 16, 2005
By by Steve Flowers
The 2005 Legislative Session is two weeks old and all that you hear is the hue and cry among legislators regarding what to do with the beleaguered General Fund Budget.
There will be no diversion of education dollars to rescue Medicaid and the other General Fund departments. Politically diversion is not an option.
To his credit the Governor is working with legislative leaders to find a solution.
There is a glimmer of hope surfacing on the horizon. A tax on gambling may be offered to remedy the problem. The beauty of the plan is that only the owners of the legalized bingo establishments will pay the tax.
The proposed legislation prohibits the owners from passing the tax on to the customers. It would be a 15% flat tax which would generate $75 million for the desperate General Fund. It would be a painless non consumer revenue source, which would be ongoing and not a one time fix.
Currently none of the bingo locations pay a bingo tax. There are at present five legalized bingo operations in the state. The three located in Wetumpka, Montgomery, and Atmore are Indian owned and are granted permission by the federal government. They pay no tax and would still not pay any because they are protected by federal sanctions and can siphon off all the gambling money they want from Alabamians and will not pay their fair share of tax on the profits.
Therefore, only the two privately owned tracks in Greene and Macon counties would anti-up for the tax. The legislation would allow Jefferson and Mobile to have bingo, and these two counties would couple with Greene and Macon to generate the $75 million.
The anti-gamblers should embrace the proposal because it will restrict expansion of bingo in the state and limit it to these four counties. The other 63 counties would seal their borders to legalized gambling.
It is a win-win plan for legislators and will probably win legislative approval. However, because it is a constitutional amendment it must be voted on in a statewide referendum. Therefore, it will not be known for sure when the $75 million will be available to bolster the budget shortfall which is in dire straits. Also the bingo money will have to be supplemented with some other source because the General Fund needs about $200 million to meet its basic needs. However, the bingo plan does give some hope and shows that legislators are generating ideas to solve the state's financial problems.
Other issues which have risen to the front burner as the session unfolds include a constitutional amendment to ban same sex marriage in Alabama, which will easily pass in both chambers.
However, there will be a fight over when the vote on the issue will go before Alabama voters. Republicans want it to be voted on in the 2006 General Election, while the Democrats want the referendum in the Primary. The stalemate over the time of the vote may stall its passage. There will be an effort to resurrect a vote on last year's Amendment 2 which would remove racist language from our 1901 Constitution.
Like the same sex marriage, this is a constitutional change and must go before voters.
The perennial issue of restricting the transfer of money between political action committees, known as the ban on PAC to PAC money laundering, will be debated. Also discussed will be a ban on pass through pork projects in which appropriations are hidden in the state budgets.
However, the most pressing and overriding issue will be what to do with the shortfall in the General Fund Budget. Representative Ron Johnson offered a proposal to add a tax of five cents to soft drinks, but it received a very cool reception from legislators and appears to be dead on arrival. So for now it appears that legislative leaders are counting on a bingo tax to help rescue the General Fund.
See you next week.
Steve Flowers writes a weekly syndicated column on Alabama politics. He served 16 years in the Alabama House of Representatives. Steve may be reached at www.steveflowers.us.