Windfall caution

Tuesday, January 13, 2009

It's no surprise Missouri lawmakers are considering ways to spend a new source of revenue. Never mind that Proposition A, approved by a sizable margin of voters in November, clearly earmarked anticipated casino-revenue increases for the state's school foundation formula.

Even before the vote there were concerns about how the money would be spent. For one thing, it's still unclear how the school foundation formula would spread the new casino revenue around.

And there were serious concerns that the Prop A language would be binding on legislative spending plans. This is a particular concern because of the anticipated shortfall this year in state revenue.

Rosy Prop A forecasts have suggested that changes in casino operations -- no loss limit, no time limit on gamblers, a cap on the number of casinos -- would result in a significant increase in casino revenue to the state -- an estimated $130 million in new revenue. That's the amount lawmakers in the new legislative session are toying with as they begin the budgeting process.

Of course, the $130 anticipated windfall didn't take into account a sagging economy, layoffs and mortgage foreclosures. Will gamblers still flock to Missouri's casinos in such uncertain times?

Most of the ideas being floated for using the additional casino revenue tend to relate to education needs around the state, including colleges and universities that are not funded by the school foundation formula. That formula is used to decide how much local school districts get each year from the state.

The bottom line: As we forewarned, it was likely all along that lawmakers would want to fiddle with how to spend new revenue -- if it materializes -- from casinos, no matter what proponents of Prop A promised.

Any spending plan that does emerge should be mindful of the fact that there may be $130 million to play with, or more than that, or less than that, or nothing at all.

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