When Iowa Gov. Terry Branstad (R) was campaigning to reclaim his old office from Chet Culver (D), he argued against Culver’s casino-expansion plan, arguing that it was economically inadvisable. With the Iowa casino market not so much saturated as waterlogged, it was solid argument. But Candidate Branstad was a different animal than Chief Executive Branstad, who proposes to compound casinos’ difficulties with a 63% tax increase, raising the rate to 36%. Why? So he can grace other industries with a 50% tax cut. Yes, once again gaming is the whipping boy … or, if you prefer, the imaginary bottomless well to which politicians go every time their budgetary math comes up short.
While existing Iowa casinos weren’t exactly receptive to Culver’s desire for four new casinos (he got only one), that’s nothing compared to the alarm with which they view Branstad’s proposal. Iowa-based Strategic Economics Group vetted the plan and concluded it would result in casino closures (four), bankruptcies (tw0) and lost jobs (2,600-4,500) — to say nothing of sundry other economic ill-effects. “Notwithstanding the widely held perception that the industry is awash in cash, we found that four facilities currently show negative corporate equity. Another five had income on their books of less than $10 million – much of which may already be obligated in support of loans,” was quite literally the money quote.
… and they all live happily ever after. The governor pooh-poohs critics by comparing his mooted tax rate with those of Illinois and Indiana, but there’s some fuzzy math involved in the equation. Some of his argumentation is downright nonsensical. Example: Higher taxes won’t affect casinos because they’re at saturation point now and won’t be increasing their workforces. I guess he figures companies like Ameristar Casinos just have millions of dollars lying around doing nothing and a 63% tax hike will have no impact whatsoever on the status quo. Tell us another bedtime story, Uncle Terry.
Penn National Gaming is already talking layoffs at its Sioux City riverboat. Isle of Capri Casinos is keeping its counsel on the matter but, with four Hawkeye State establishments, it’ll take a heavy blow amidships.
The powerful odor of mendacity. Suffusing Branstad’s scheme is the stench of moral opprobrium. Even though he spouts nonsense like “We don’t want to punish casinos,” the governor’s made it quite clear by implication that icky-poo gambling needs to pay the piper for good, clean, wholesome industries (like mortgage lenders, perhaps).
OK, so maybe he won’t need all the entire tax increase, he suggests … but like a mustachioed St. Peter, the self-proclaimed pauper has divided Iowa’s economy into goats (casinos) and sheep (everybody else). He’s also pushing preschoolers under the bus, meaning tykes and casinos finally having something in common. Even Branstad’s GOP legislative allies aren’t sharing his fervor for sacrificing of the gaming industry upon the altar of “small business” (i.e., anything that isn’t a casino). Likewise, why is there such a discrepancy between Iowa’s 12% corporate rate and its 23% gaming-tax rate? If Branstad gets his way, Terrible’s Lakeside will be paying $6 for every buck shelled out by Joe Schmoe’s Pest Control. Don’t know about you but I’ve got a problem with that inequity. Latterly, Terry B.’s been making some vague noises about compromise but, substantively, his bottom line remains the same.
On the plus side, Branstad isn’t cowed by Caesars Entertainment’s CEO (unlike his counterpart in New Jersey). If the Iowa Lege approves intrastate Internet poker, he’ll probably affix his John Hancock to the law (which would also do away with the requirement that Hawkeye State counties re-ratify their casinos every eight years), though the guv’s left himself a fair bit of wiggle room. It seems a long shot at this point but the industry leaders who now prefer a federally overseen system should have gotten their act together at least two years sooner. History’s leaving them on the train platform.
Who is Jerome Powers? A cheap S.O.B. who takes out markers in bad faith. Or so it would appear. He seems to regard Native American tribes as chumps. I’d love to see him try and weasel out of a gambling debt to Caesars … or better yet, to Stanley Ho.
