Gov. Arnold Schwarzenegger says he’s counting on four wealthy
Indian tribes and their expanding gambling operations to help close
California’s massive budget shortfall.
Gov. Arnold Schwarzenegger says he’s counting on four wealthy Indian tribes and their expanding gambling operations to help close California’s massive budget shortfall.
Voters gave their blessing Tuesday to the deals allowing the tribes to add thousands of slot machines. Now the question is: will the money really make much of a difference?
Propositions 94-97 give the tribes rights to 17,000 additional slot machines in exchange for promises to share hundreds of millions of dollars annually with the cash-strapped state. With about 96 percent of the votes counted Wednesday morning, the measures were leading by a margin of 56 percent to 44 percent.
How much California will actually take in is up for debate, especially in the next 18 months as the state struggles to close an estimated $14.5 billion shortfall.
The tribes’ nonstop television ads in recent months have promised California will get about $400 million annually from the deals through 2030, totaling nearly $9 billion. Schwarzenegger bet weeks ago that they would pass, and his finance team has budgeted for the tribes’ big checks to begin arriving in Sacramento by the end of the summer. That means he’s banking that they will begin the work of installing new slot machines almost immediately.
Even if the governor and tribes are right, the deals would cover just 4 percent of the state’s shortfall. And at most, the gambling revenue would amount to less than one half of 1 percent of the state’s general fund budget in any given year through 2030.
The state’s nonpartisan legislative analyst, Elizabeth Hill, has warned even those estimates are too rosy. She says the governor’s betting on far too much revenue, far too soon.
Even as the tribes and their supporters celebrated their victory Tuesday night at a downtown Los Angeles ballroom, Roger Salazar, spokesman for the ballot fight, said it was too soon to say how quickly the slots would be installed – or exactly how much they’d be able to pay the state in the next year.
“We’re probably looking at an additional $200 million over the next year but we’ll wait till the dust settles before deciding how many slot machines the tribes will add,” he said.
California’s casino industry is already second only to Nevada’s, and the new gambling compacts represents a 30 percent increase in the number of slots in the state.
“Voters said yes to hundreds of millions of dollars in new revenue for the state each year, and once again said yes to standing with California’s Indian tribes” said Salazar.
The deals would not have required voter approval, but a coalition of two other gambling-rich tribes, a horse track owner and a casino-workers’ union gathered nearly a million signatures to force referendums on the deals onto the ballot. They raised over $30 million to defeat the agreements, but the four tribes that stand to gain raised about $104 million, for a blitz of television ads to urge their approval.
Those opposed argued the deals unfairly consolidate casino wealth in the hands of a few tribes in the state while doing little to help dozens of others that remain in poverty across California. They also worried the deals would cut into race track profits, increase competition and curb workers’ rights.
“They outspent us 4-to-1 and that makes it tough to win any political contest,” said Scott Macdonald, spokesman for the opposition group, No on Unfair Gambling Deals. “There are real concerns about sharing more revenues with poor tribes, protecting workers and local communities who are losing a voice. We hope the governor is listening if he wants to do more of these.”
