Missouri lawmakers look to divert new casino tax money

JEFFERSON CITY, Mo. -- Just weeks after voters approved a casino ballot measure, Missouri lawmakers are looking to redirect the money that had been earmarked for the state's school funding formula.

Some lawmakers want to divert the money to raise teacher salaries. Others want to use it to boost spending on gifted and special education programs in K-12 schools, or to channel it to colleges and universities to hold down tuition costs.

The use of the projected $130 million annually in new casino taxes is likely to spark debate during the 2009 legislative session that starts Wednesday -- partly because new tax dollars are expected to be scarce in a tight budget.

Adding to the potential controversy is a perception that the revenue from previous voter-approved gambling measures has been used to replace -- instead of enhance -- existing money for education.

The measure, passed by voters in November, repealed the state's law limiting gamblers to losses of $500 every two hours, raised casino taxes and capped the number of casino licenses.

Set aside in a special fund

Drafters of the measure sought to assuage concerns by placing the new tax revenue in a special fund and requiring it to be spent as additional dollars through Missouri's funding formula for K-12 schools.

But if the voter-approved law is followed, 115 of the state's 524 school districts are projected to get no additional money from the ballot measure next fiscal year due to the way the funding formula is calculated.

That has caused a stir among some lawmakers.

"The language addressing the formula was, for lack of a better description, not ideally written," said incoming Senate President Pro Tem Charlie Shields, R-St. Joseph, who was a supporter of the ballot measure. "There probably are going to have to be some changes."

Lawmakers can ignore the spending directives approved by voters and appropriate money as they choose, or they can change the law itself with a majority vote in the House and Senate and the governor's signature.

House Majority Leader Steven Tilley, R-Perryville, is among those wanting to use the new casino revenue to boost pay for public school teachers. A lack of a funding source contributed to the failure of a teacher pay proposal in the 2008 session, and the new casino taxes could fill that void, he said.

Purpose of the measure

Senate Majority Leader Kevin Engler, R-Farmington, said he doesn't want to change the intended purpose of the casino ballot measure. But earmarking the money for teacher salaries instead of the general school funding formula still could accomplish the voters' intent, he said.

"Ninety-nine percent of my people don't know what the funding formula is," Engler said. "They just want to make sure it goes back to the schools and is not diverted to some other area, and teacher salaries is definitely coming back to the schools."

Diverting the money to colleges, however, might not meet voter expectations, he said.

Senate Minority Leader Victor Callahan, D-Independence, has proposed several ways of redirecting the casino money. He describes his bills as a starting point for discussions.

One of Callahan's proposals would pay the money to higher education institutions as a reimbursement for either reducing tuition or scaling back tuition increases.

His other proposals would distribute the new casino money to schools on a per-pupil basis, just as with current casino tax revenues. One of those options would increase the amount paid to schools for students in gifted and special education programs. Another would speed up the phase-in of the general school funding formula passed in 2005.

"I think the voters' intent was to get more money to education, at least in part," said Callahan, who opposed the ballot measure because it limited the number of casinos. "I think we have to ensure that every pupil in Missouri gets some benefit from those extra dollars."

Some critics of the ballot measure caution against basing any new initiatives on the new pot of casino money.

"That's all predicated on more people spending money at the casinos, Missourians losing more money at the casinos and people flying in from other states," said Evelio Silvera, executive director of Chesterfield-based Casino Watch. "There is absolutely no evidence that's showing any kind of an increased uptick in revenues from casinos that's going to lead to this $130 million."

The poor economy has hit casinos nationwide.

Missouri casinos lifted loss limits Nov. 7 in response to passage of the ballot measure. Their November revenues were up 9 percent compared with 2008. But excluding the Lumiere Place casino in St. Louis, which was not open in November 2007, revenues from Missouri's other 11 casinos declined 2 percent in November 2008 compared with the same month a year ago.

Missouri Gaming Commission executive director Gene McNary said he has heard anecdotally from casinos that patrons are winning and losing bigger amounts of money since the repeal of loss limits, and that more people are coming to Missouri casinos from outside this region.

But December casino revenues are not available yet.