When lawmakers first headed down the path of state-authorized gambling in the late 1980s and early 1990s, they seemed cognizant that the tax revenues that would follow were a lucrative and yet unstable source of revenue.
The state didn’t establish the Hoosier Lottery to directly benefit education, as many states have done. Lawmakers put restrictions on the use of local casino tax revenue to try to prevent those communities from building the dollars into the budgets used for everyday expenses.
And the General Assembly set aside big chunk of gambling dollars to use for local projects, essentially one-time expenses that would provide immediate benefits without increasing ongoing budgets.
But along the way, many of those protections against the instability of gambling taxes eroded. Now, the state is paying for those changes as tax revenue from gambling decreases and threatens to fall further.
During tougher economic times, gambling dollars aimed at one-time costs were just too tempting for lawmakers to resist. It seemed a decade ago that casino revenues were in fact one of the state’s most stable sources of cash — so stable that when lawmakers needed a little more money, they turned to gambling to get it.
Casino market changes - Indiana OMB Good-government types also grew critical of the Build Indiana Fund, through which local lawmakers designated gambling dollars for those local projects. Hoosiers started thinking of that program as a slush fund of sorts through which lawmakers could bolster their reelection efforts.
So that money was essentially moved into the budget to help pay ongoing costs.
Now, gambling revenues make up the fourth largest source of revenue for the state’s general fund, its main checking account used to fund schools, Medicaid and general government. For the next two-year state budget, gambling taxes earmarked for the general fund are projected total more than $1 billion.
For years, that seemed OK. After all, gambling taxes don’t come directly from the paychecks of Hoosiers like income taxes do. They come from people choosing to wager their money for entertainment — and lots of those people were coming from other states.
But times have changed.
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