By Kirk Johannesen, The Republic
johnannesen@therepublic.com
Using money from slot machine licensing fees for property tax cuts would have no negative impact on the horse tracks where the slots would be added, those involved say.
Representatives of Indiana Downs in Shelbyville and Hoosier Park in Anderson said Gov. Mitch Daniels' tax proposal wouldn't affect them.
"There is no trickle-down impact," said Jon Schuster, general manager of Indiana Downs.
He said the $250 million licensing fee would not require additional costs be passed on to customers to recoup that payment.
In fact, the tracks and the state benefit from adding the slot machines, said State Rep. Sean Eberhart, RShelbyville.
A portion of the profits from the slot machines must fund purses for the races, to attract the best jockeys and horses and support the state's horse-racing industry.
"We are grateful for the opportunity to add slots at Hoosier Park, so we paid the licensing fee so we could expand the facility," said Cindy Duran, a spokeswoman for Hoosier Park.
The bill that allowed the slots stipulated that the licensing fee be used to reduce property taxes.
"A lot of the reason this legislation passed to allow slots at the tracks was the money for property tax relief. I believe if it was not in the legislation, it would not have passed," Eberhart said.
Each track had to pay $150 million by Nov. 1. A second payment of $100 million is due Nov. 1, 2008.
Daniels is suggesting using this existing legislation as part of a larger plan to reduce permanently property taxes, Eberhart said. The licensing money would be applied toward property taxes in 2008.
Duran said Hoosier Park is happy that the licensing fee helps lower property taxes.
Once the slot machines are operational, the tracks must pay a percentage of their gross revenue to the state. A portion of that money would go toward property tax reduction annually.
Sliding scale
Schuster said the percentage the tracks would pay to the state is based on a sliding scale according to the tracks' profits. He said the scale is divided into brackets of 25, 30 and 35 percent.
"It's a hefty fee for the tracks, but evidently they can make it work," Eberhart said.
Schuster said the licensing fee was extraordinarily high, but the tracks knew that and devised plans to make their new gaming operations feasible.
If the state legislature voted to increase the percentage of the gross revenue tracks pay to the state, that could be a problem.
"That would be cumbersome," Schuster said.
Eberhart said the percentages are not permanent and could be changed. However, he said, lawmakers realize there is a threshold beyond which the tracks wouldn't make a profit on the slots, and couldn't continue operating.
The consequence would be the loss of money used for reducing property taxes.