Yes on Propositions 94, 95, 96, 97
Rejecting the agreements would exacerbate budget crisis
By Rohit Joy
From the February 2008 Print Edition
In 2006, Governor Arnold Schwarzenegger negotiated, and the Legislature approved, a series of compacts with four Indian tribes in California relating to casino gambling on their lands. These compacts increase the number of slot machines tribes may operate in their existing casinos while simultaneously boosting the payments they make to the state. Opponents of the agreements have worked to qualify referendums on each of the four agreements on the February ballot, hoping that voters will reject these agreements and the governor and Legislature will be forced to return to the negotiating table and come up with agreements that more closely reflect their interests.
The primary benefit of the new agreements is that they will result in increased tax revenues for the state. According to Alan Meister, an economist with Analysis Group, Inc., these agreements will generate $10.2 billion in payments to Californias general fund, more than $5.5 million in taxes and payments to state and local governments, and $128 million in payments to non-gaming tribes.
At a time when Californias budget outlook is dismal, with a $3.3 billion deficit this fiscal year and a projected $14.5 billion deficit next year, the additional revenue is essential to avoid impending tax increases. According to Senator Jim Battin, R-Palm Desert, Schwarzenegger has included $430 million in tribal gaming revenues in his proposed 2008-09 budget, almost $400 million of which comes from the compact revisions alone. Voting down the agreements would likely mean foregoing these additional revenues for next year, at a time when they are badly needed.
Opponents of the new compacts argue that this promised revenue is unlikely to materialize, because, in the words of the San Francisco Chronicle, they allow the tribes themselves instead of an independent auditor to determine the amount of net winnings that would be subject to revenue sharing with the state. Such allegations are unfounded because the memoranda of agreement relating to these compacts signed by the governor and the tribes explicitly require that casinos provide copies of independent audits to the state each year. In addition, the memoranda require that the tribes maintain certain internal control standards. These safeguards will all help ensure that the state receives the revenue it is owed under these agreements.
Another drawback that opponents point out is that the expansion of gambling resulting from passage of these measures will negatively affect surrounding communities. These fears are certainly not without merit; crime does tend to rise with more legalized gambling, and the presence of casinos is unquestionably bad for families. That being said, the magnitude of the expansion is grossly exaggerated by detractors of the deals. Yes, the number of additional slot machines authorized by these compacts totals 17,000, not a trivial increase by any means. However, the total number of casinos permitted under all four of the new agreements would only be one more than under the current compacts, so the spread of slot machines would not be as great as opponents would have voters believe. In addition, it is important to remember that all gambling under the agreements in question would remain on tribal lands, so fears of Vegas-style casinos proliferating all over California are wildly off the mark.
In addition to concerns about transparency and the expansion of gambling, there are a few environmental objections that are easily dismissed. Opponents complain that the agreements do not contain language precisely mirroring the California Environmental Quality Act, but the environmental safeguards that are included tribes are required to report on environmental impacts and negotiate enforceable agreements to address these impacts with the county in which they are located and any adjoining cities are sufficient.
As for labor, many unions protest that the compacts do not apply Californias labor regulations to the casinos, but such burdensome regulations are not desirable anyway, and it is not necessary that the tribes, as sovereign nations, be subject to them.
The final major objection to the agreements is that they do not guarantee money for public education. The reason for this is that revenues generated under these compacts are not subject to Proposition 98 restrictions, which require that a minimum percentage of all general fund revenues be allocated to education. The lack of such stipulations is actually a benefit because Proposition 98 essentially generates automatic increases in education spending during periods of strong economic growth without saving to cover this increased spending during weak economic times, squeezing other vital state services such as public safety and infrastructure. The compacts, by providing more flexibility in how the revenue from casinos can be used, lessen the effect of Proposition 98, making funding for these other public services more stable and reducing auto-pilot increases in entitlement spending, one of the main causes of Californias perpetual budgetary woes.
Under the California Constitution, the governor has the power to negotiate agreements with Indian tribes, subject to approval by the Legislature. The people have the power to place a referendum on any law on the ballot upon gathering enough signatures. However, by enlisting powerful interests such as racetrack and card club operators, opponents have turned the ballot-box battle into a high-stakes competition among special interests for favored treatment rather than a true grassroots effort to control gambling. If the compacts are rejected, any revised agreements that emerge in the future will simply contain provisions to appease the racetracks and card rooms without addressing the concerns of gamblingcontrol advocates.
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