Friday, July 17, 2009
Ohio's Gambling Revenue Is A Pipe Dream...
The projected gambling "revenue" that is supposed to prop up the back end of all of the Social Services in Governor Strickland's lazy-man's budget will end up just so much smoke.
As is the norm for most State-run projects (see lottery as funding for education????), it will be full of cost overruns, bad purchasing choices, kick-backs and loopholed contracts.
West Virginia revenue from slot machines is off 7 percent for the current year. And projections for this coming fiscal year are worse.
If a state that is experienced is missing their projections, what will happen to Ohio's rookie projections?
Gov. Strickland's projections for Keno profits for the Ohio Lottery Commission were at $73 million of the budget for the current fiscal year. Now those "revenues" are running off $40 million at a pace that projects to only $33 million.
That's a lotta red ink and a pretty big difference, doncha think?
When the slot machines were first proposed back in March by racetrack owners to “save their businesses”, they estimated the revenue to the state to be $600 million. Now, when Governor Ted wants slots to balance the budget, they're supposed to make $933 million.
Jimi was right: If 6 were 9, well, wishes still ain't horses, after all.
The solution to a healthy budget is a better business environment with better tax structures, NOT A SHELL GAME where the only winners are a couple of outdated gambling ventures and an out-of-state slot machine manufacturer.
That is, unless your whole economic plan is a shell game. Then it makes sense because you are trying to scam the citizenry. Just. One. More. Time.
Instead of helping prop up his lazy man's budget, Gov. Strickland will be looking at an ultra-costly fiasco. The state will count on the $933 million of projected revenue, which will fail to materialize, and at that point they will have another deficit built on those faulty expectations, ending up with even more job cuts, and as they usually do, an end result worse than an honest days work at effective budget cuts and a revamped tax system would have been.
To simplify, here are the steps involved:
1-The assumption (see "projected revenues") that a government program, especially one designed to raise money, is going to be badly run, is a pretty safe one.
2-Being off on projected revenue hurts budget plans. Ohio sees what is happening with other gambling states, and blithely ignores those results when making its own plans. Pretty smart, huh?
3-The problem is that they plan their spending and make the budget based on the false assumption that they are getting $73 million in revenue, when it is actually $33 million. At this point we don't even know if that is gross or net - we don't know the formula they used - although you can wade through the 1000+ pages and presumably find out. It probably changes based on political expediency.
Can we assume, given the record on Keno, that things will be the same with slots? I think so.
The result is a LOSS as the budget is in deficit because, using Keno as the example -- Slots will be worse, they have already spent the $73 million, additional jobs and programs have to be cut, and the cycle of deficit spending goes on and on...