The Latest of 57 Reasons to Reject the Ohio Learn & Earn Initiative (103106)
There’s so much good stuff in these reasons that I’m forced to extract small bits from each to identify particularly objectionable points. That is NOT an excuse to not go to Writes Like She Talks for all three big enchiladas.
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From Jill at Writes Like She Talks (original entry relating to Jill’s effort is here):
- Reason 12 — (in this instance, the conclusion is the money quote) “this proposed language represents the design by which corporate interests believe they can best enshrine and guarantee for themselves a deeper foothold in the gambling industry in Ohio.”
Not bad for the cost of a campaign — A state-granted, voter-granted monopoly. Not if this blogger can help it.
- Reason 11 — (this is my take on one small part of a bigger objection) The big problem that screams out at me as a financial guy is that there is no provision to ensure that the funds will be walled off from or not commingled with other funds.
The lottery, by contrast, IS walled off.
- Reason 10 — (this is my “key extract” from Jill’s analysis) The amendment says that “No other fees or taxes may be applied to or levied against gross slot machine revenue or the amounts wagered or the proceeds of the other games authorized by this section.”
If OL&E passes, it will probably the first time in American history that a “no new taxes” pledge exempting a specific industry will be written into a state constitution.
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Other Voices:
- Lincoln Logs — Don’t Let Issue 3 Slip Under the Radar
- Boring Made Dull — Ohio Issue 3, Fall 2006, Part III “Don’t Learn, while Racetrack and Casino Owners Earn”
- (added November 1) Pullins Report rips on lobbyist Neil Clark, with good cause
I’m no big fan of Voinovich (especially regarding Bolton), but today he was on Bill Cunningham’s show and he destroyed Issue Three. What people need to understand is who is paying for all the the slick commercials and who stands to profit from Issue Three.
Comment by LargeBill — October 31, 2006 @ 8:54 pm
#1 Bill, That’s good to know, because Cunningham was cheerleading Issue 3 a couple of weeks age when a couple of proponents were on.
Comment by TBlumer — October 31, 2006 @ 10:05 pm
I work with the Ohio Learn and Earn campaign and I wanted to clear things up on these three misleading reasons.
Reason 12 and 10: A monopoly will not be created. The tax language that’s quoted means that no new taxes will created but it does NOT exempt owners from paying taxes as is current law. Less than 10 percent of the slot revenue would go to facility owners and they still have to pay taxes on that money…after paying regular taxes and operating expenses.
Reason 11: Issue 3 would guarantee that 30 percent of the slot revenue MUST be put away for college tuition grants. If legislators want to use this money, another ballot initiative will have to be brought to the people of Ohio to be voted on.
Comment by YesOnThree — November 1, 2006 @ 12:36 pm
Dear Yes on Three:
1. Re: 30% must be put away for college tuition grants. The proposed language fails to provide for putting it away, anywhere. It says that the money shall be paid to the state. That is IT. Absolutely not another single word in the entire five pages, single-spaced typed proposal says who in the state gets it, what they get to do with it while it accumulates, to whom it gets transferred for payment (students in vouchers? directly to the schools?).
Please don’t say that this is for the GA to figure out or the Regents to figure out. The lottery constitution language specifies that a there will be a fund into which the lottery proceeds will go.
The Issue 3 language is sloppy and fails to make similar provisions. You say the GA can’t touch it - but who then will implement this portion of the proposal? Who will in fact say how and to whom within “the state” the money will be paid?
2. Please explain how there will not be a monopoly. Please also explain your rationalization for the amendment language only providing for a $15 million licensing fee when industry experts say that the market value is closer to $200 million and Forest City is offering $50 to PA.
3. As for no other fees or taxes being levied, yes, this language is in a state constitution so, to the extent that the corporate owners have to pay federal taxes, Ohio’s constitution has no say.
However, that state of Ohio itself, its coffers, get nothing. Please tell me which taxes are the taxes you believe will be applied? In a flyer I received today from the Vote Yes on 3 Committee, Payroll taxes and 1% real estate taxes are listed. That’s it. What did you have in mind?
4. Speaking of that flyer, did you know that the numbers on it do not add up?
In big blue numbers it says, 2,842,165,433 Total Est. Annual Gross Slot Revenue
Then it says that the total to college funds, statewide econ dev., addiction services and horse folks, equals 1,278,974,444.
Then, it says that the total to equipment, salaries, wages, benefits, site operations, ad and promo, debt service (what debt service are they talking about by the way? and who gets that interest and payment on debt?), payroll and real estate taxes, and “net total proceeds” (of 9.5% or $270million) equals 1,563,190,988.
NOW, under THAT, it says, “Net proceeds after tax: $175,503,715.”
What is the difference between the 270million net proceeds and the $175 net proceeds after tax?
Net total proceeds should mean net total proceeds.
So - is that 270million still gross total proceeds? And the $175Million is net total, being the amount after taxes?
Which taxes are you applying to bring the number down from a net of $270 to a net of $175? That $95million difference, or about 35% difference - where is that all going? Is that what the federal government gets?
Help.
Comment by Jill — November 1, 2006 @ 6:40 pm
YesOnThree and Jill,
Jill, thanks for the comment. OL&E folks left two comments, and I lost track of this one (there’s another at a previous post that I think I hit out of the park).
Jill, you did fine. The presentation is clumsy, but I have to assume that the 95 mil is Federal income tax. The highest corporate rate is 35%, but the first couple hundred thou is taxed at a lower rate.
Speaking of clumsy, I’d like to know if they had a CPA firm review the forecast or projections for reasonableness and issue some kind of report. Page 6 of the Fact Book mentioned below refers to “as projected,” which means “if our assumptions are correct, this is what will happen.” That is a LOT less assurance than a FORECAST, which says, if these assumptions we are confident about pan out, this will happen.” BIG DIFF. Assuming it’s a projection, it’s really a “what if” that means nothing, and promises nothing.
Speaking of clumsy, have you downloaded the “Fact book”? There are howlers galore in it. There’s a link at the OL&E Home page. It’s 8.1 mb.
MR. YesOnThree, will the operations be subject to the phasing-in Commercial Activities Tax (CAT) or not, and if not, why not? The rate when it fully phases in is 0.26% of gross revenues (regardless of whether profitable). That rate times the $2.842 bil is $7.4 million. Is the industry getting a $7.4 million a year tax break written into the Constitution?
Comment by TBlumer — November 1, 2006 @ 7:47 pm
Oooh - interesting question about the CAT. See - that’s the kind of thing, I just don’t “do” so to speak.
I get what you’re saying about the max. corp. tax rate.
I never stop resenting the lousy microecon prof I had my freshman year in college. He really turned me off to this stuff.
I haven’t thoroughly reviewed that factbook but yes, I’m aware of it’s existence. I’m going to wrap up the amendment language and head home on the last couple of days - maybe pull in some of that other stuff. Honestly - it’s amazing how many ways there are to slice this damn thing.
And you know, part of me feels badly about it. I mean, what would have been so bad about doing this in two phases - in getting the scholarships and tuition grants set and organized and looking like they would really help and matter. And THEN doing the gambling thing? Sigh.
Comment by Jill — November 1, 2006 @ 11:21 pm