DOVER, Del. (AP) — Markell administration officials on Monday proposed an $8 million temporary financial bailout for Delaware’s three casinos, which claim they are struggling financially because of high taxes and increased competition from neighboring states.
Administration officials made the proposal to the legislature’s capital budget committee as the panel began work on a spending plan for construction and road projects in the fiscal year starting July 1.
Ann Visalli, Gov. Jack Markell’s budget director, told lawmakers that the money is intended to provide temporary relief to the casinos, which have complained repeatedly about how much money they have to pay to the state.
“In the interim, it is my expectation that they will be working with the General Assembly on a longer-term solution,” she said.
Visalli offered few details about the relief plan but said the Department of Finance would develop a formula for distributing the cash to the casinos, which she said are struggling with gaps between revenues and costs. Administration officials did not indicate that the casinos would have to pay back the money.
Dover Downs CEO Ed Sutor appeared to be caught off guard by the proposal.
“I don’t know who proposed it. I don’t know anything,” said Sutor.
Sutor has lobbied in recent months for long-term tax relief for the casinos but acknowledged Monday that “anything is helpful.”
“You don’t look a gift horse in the mouth,” he said.
Administration officials want to use the capital budget as a conduit for the money because work on the operating budget already has been completed.
Markell spokeswoman Cathy Rossi said the relief money is intended to help offset an expected increase in vendor costs borne by the casinos when new gaming machine leases are signed in coming months.
“The administration has not supported changing the tax structure permanently, but recognizes that forcing the casinos to bear additional costs will make them less competitive at a time when they need to be more competitive with casinos in surrounding states,” Rossi wrote in an email. “So while the resources are not there to reduce the state’s share, the administration is OK with the concept of not making things worse.”
Republican Rep. Colin Bonini of Dover, while not a strong advocate of gambling, agrees with the casinos that they are overtaxed.
“That tax rate is the long-term solution,” said Bonini, who favors the interim relief.
Administration officials said the money for the casinos, which would not have to spend it on capital needs, would come from a portion of some $50 million in newly available revenue. That money includes more than $21 million added to the state’s official revenue estimates Monday by the Delaware Economic and Financial Advisory Council compared to its May forecast. Increases in estimated personal income tax revenue accounted for the bulk of those revisions.
Visalli also said a February bond issue resulted in additional $22 million in bond premiums coming into state coffers since Markell proposed a $423.5 million capital spending plan in January.
In addition to casino relief, the administration made several other recommendations for new capital budget expenditures, including $10 million in additional funds for the port of Wilmington.
Officials also are recommending about $8 million extra for open space and farmland preservation, $6.7 million more in capital improvements for public schools and colleges and universities, and $2 million for public safety projects.
Lawmakers also have their own wish lists of spending proposals for construction projects, some of which overlap with the administration’s suggestions. Members of the capital budget committee are expected to begin voting on the various proposals Tuesday.
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