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Gambling expansion as part of Minnesota budget fix? Don’t bet against it, some legislators say

Electronic pull tab machines might be part of the elusive end game that helps bring the legislative session to a close.

The possibility that the slot machine-like games might be part of a compromise between struggling DFLers and a governor committed to no new taxes was raised by two Republican representatives Monday afternoon. Those machines, which could be installed in bars across the state, could raise as much as $800 million to $1 billion a biennium, according to Rep. Tom Emmer, R-Delano, and Rep. Kurt Zellers, R-Maple Grove, assistant minority leader.

Emmer and Zellers appropriately sit in the back row of the House chamber.

“Back benchers,” said Zellers.

“It’s good to be in a spot where nobody can sneak in behind us,” said Emmer.

GOP is content at moment to sit and watch disarray
Though occasionally Emmer still tries to attach amendments to DFL bills, more and more the Republicans are becoming mildly amused spectators of the state political process, which currently features DFLers fighting among themselves.

To entertain themselves, the back benchers frequently have offered up amendments to DFL bills.

Typically, the amendments are voted down. 

“Throw a little sand in the machine once in a while,” said Rep. Paul Kohls, R-Victoria, who sits close to the back benchers philosophically and physically.

“Amendments are the one way that your side gets to be heard,” said Emmer of the frustration of being in the minority.

But more and more, silence is starting to be the Republican strategy. On Saturday, for example, Emmer had “about 20 amendments” ready to attach to the DFL House tax bill, but Rep. Laura Brod, R-New Prague, asked him to remain silent.

Laura Brod
Rep. Laura Brod

Brod, one of the rising stars among the Republicans, said the House tax bill “is so bad that no amount of amendments could fix it.”

She knew Emmer was disappointed by her request, but …

“Even the Black Stallion himself needed someone to hold a rope sometimes so he did not hurt himself,” said Brod of stifling Emmer.

But who will hold back the DFLers from hurting each other?

For the time being, at least, DFLers are far from united in their approach to tax bills. The House and Senate tax conference committee will have a huge job trying to reconcile the differences in the House and Senate proposals that have only a fourth tier — a new tax bracket on the state’s wealthiest people — in common.  Pawlenty, of course, has vowed he’ll veto any budget bill that comes to him with a tax increase.

House, Senate DFLers split over revenue fix
How bad are the splits in the DFL over how to create new revenue?

Rep. Tom Rukavina, DFL-Virginia, held his nose as he voted for the House tax bill Saturday. He voted for the bill only because his vote was needed to get the bill to the conference committee. He was still angry about the bill Monday because it includes tax increases for smokers and drinkers. It’s hard to find two more regressive taxes, Rukavina said.

In conference committee, “cigarette and liquor taxes go away or the bill dies,” Rukavina said.

Tom Rukavina
Rep. Tom Rukavina

But Rep. Ann Lenczewski, DFL-Bloomington, chairwoman of the tax committee, says those taxes “will stay because the governor has shown he’ll support them in the past.” (Recall Pawlenty’s support of a “health fee” increase on tobacco in the past.)

But Brian McClung, the governor’s spokesman, said that by any name, the governor will veto an increase on the cost of smokes or drinks.

“The DFL increases on cigarettes and alcohol are tax increases and nothing else, and the governor doesn’t support them,” McClung said.

Lenczewski said that the House tax bill, which calls for $1.5 billion in tax increases, is the only bill that has a chance of survival because it’s smaller than the $2.2 billion tax bill being promoted by the Senate.

But McClung says the governor is not impressed.

“Rep. Lenczewski’s bill raises taxes on so many Minnesotans in so many ways that she should probably get some bonus points for creativity,” McClung said.

Sen. Tom Bakk, DFL-Cook, chairman of the Senate tax committee, is nearly as contemptuous of such things as a tax increase on cigarettes and booze as Rukavina.

Back and forth the DFLers go, amazing Republicans with their inability to get together.

“Whatever their plan is to get together is so secret they don’t even know it themselves,” said Sen. Warren Limmer, R-Maple Grove, regarding the difficulties DFLers seem to be having.

Off the record, many DFLers fear that Limmer is right. DFL leadership seemingly has no unified plan for attacking the budget hole with a piece of revenue legislation that will put the smooth-stepping Pawlenty on the spot.

Large DFL majorities may be disadvantage
It’s almost become a disadvantage for the DFL to hold such large majorities in both chambers. They have too many voices. Republicans have so few voices they have no choice but to speak as one, if they speak at all.

“If there wasn’t such a gap,” said Zellers, “everybody would have to move toward the middle. Now, there’s no middle.”

DFLers and Republicans do share one common sentiment: They all want this session to end on schedule. No matter who’s right or who’s wrong on how to attack the budget problem, all legislators know that the public will be contemptuous of all pols if a solution to the multibillion-dollar budget shortfall is not forthcoming by May 18.

And that brings us back to an expansion of gambling as a possible compromise play.

Kurt Zellars
Rep. Kurt Zellers

Both Zellers and Emmer predict that when the DFL conference committee does finally come up with a tax bill, it will pass both legislative bodies, with no Republican votes and not even united DFL support. Pawlenty then will do what he’s promised to do all along: He’ll veto it.

That’s when gaming will come into play. Both DFLers and Republicans have shown support for expansion of gambling as a possible way to raise revenue in a more “voluntary” way than traditional tax increases.

Zellers, who as a college student in North Dakota, was a blackjack dealer, said nobody likes the idea of falling back on gambling revenue to fill the budget gap, but it’s at least an area of potential compromise. Members of both caucuses have a variety of gambling bills ready in the form of amendments.

DFL leadership will have a difficult time accepting increased gambling because of the close ties the party has to American Indian tribes. The tribes, big financial supporters of the DFL caucus, have long opposed any form of expansion of state gaming.

But rank-and-file members of the DFL caucus have shown themselves to be much more open to the idea of getting the state more deeply involved in gaming, and Republican members have long been boosters of a racino plan, which would add more gambling to the state’s two metro-area racetracks.

Electronic pull tabs might be one piece of puzzle
The electronic pull tabs, which were being touted by Rukavina even before the session began, would replace the paper pull tabs currently sold in many bars and clubs in the state. Proceeds from those sales have gone to charities, but sales have been falling over the years. Electronic pull tabs, Rukavina said, are much more like slot machines and, therefore, would be far more popular than the paper pull tabs.

At least some of the revenues from the electronic version of pull tabs probably would be earmarked for charities.  But the rest could go to the state’s depleted general fund and would constitute at least a portion of the new revenue that DFLers say is so desperately needed.

“It’s the one thing that could get us to a compromise,” said Zellers.

Of course, electronic pull tabs could be only part of a solution. Passage of a bill putting electronic pull tabs in bars, might make at least a small increase on cigarette and alcohol taxes palatable to people such as Rukavina. 

There are other areas of possible compromise that would allow the Legislature and the governor to scrape together some sort balanced budget bill.

Though the DFLers have ridiculed Pawlenty’s plan to “borrow” money by selling a so-called tobacco bond, they may have to accept at least a portion of the nearly $1 billion Pawlenty wants to raise with this approach. In return, Pawlenty may have to accept a DFL plan to remove property tax caps and also empower counties to more easily raise locally controlled sales taxes, though McClung is saying that the property tax caps must stay.

“Property tax caps are projected to save Minnesotans hundreds of millions of dollars,” McClung said. “The only effective way to hold down property taxes to to cap them — we did that. We need the caps to stay.”

OK, so the governor doesn’t seem excited by these possibilities. But the governor’s spokesman did not rule out gaming, making it seem more and more likely that it could be one step toward a compromise.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

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Comments (13)

  1. Submitted by Steve Titterud on 04/28/2009 - 10:23 am.

    It is SO easy to solve the problem of Gov. Pawlenty’s refusal to sign off on any tax increases.

    Call them “fees” instead. He’ll sign it in a minute.

  2. Submitted by John Roach on 04/28/2009 - 11:26 am.

    I would not want to be a state legislator trying to solve this problem. It is interesting that instead of trying to contribute to the solution, the GOP is doing nothing.

    Any bets on how noisy they become after this is finally hammered out? This is going to be unpleasant **no matter what**. Be sure to remember that when the Republicans start criticizing the inevitably ugly solution that they refused to contribute anything to.

  3. Submitted by Bill Coleman on 04/28/2009 - 12:01 pm.

    The best strategy for the DFL would be to pass Pawlenty’s budget exactly as he proposed it. They could then point to the consequences as it plays out over the next two years. Maybe then we can get a governor who is actually interested in leading and solving problems.

    The short term consequences, especially for the poor, would be difficult, but maybe the longer term benefits would be worth it.

  4. Submitted by Craig Huber on 04/28/2009 - 12:08 pm.

    Now, be fair. They’ve made their typical contribution… propose massive cuts across a wide array of state services, (casting it all as “wasteful spending”, of course) while suggesting that tax cuts for their puppeteers in the Chamber of Commerce crowd might “create jobs”.

    That “Let them eat cake” philosophy worked so well for Marie Antoinette, after all.

  5. Submitted by Ron Gotzman on 04/28/2009 - 12:45 pm.

    The only way the DFL will even consider hurting the unholy union with “big Native American casinos”, is if you tie a “big union education” plan into the gambling revenues.

    Either way, it is fun to see how the DFL continue to battle with the special interests that control the party.

  6. Submitted by Francis Ferrell on 04/28/2009 - 01:38 pm.

    What a crazy state to presently live in. No one has the chutzpah or the wherewithal to stand up politically and cry out; “I am mad as hell, and I’m not going to take it anymore!” “Enough is enough! No more crazy politics or correctness as usual!” We are in a crises sit-rep, let’s get to work and solve our problems.

    This state needs tax reform and a balanced budget. The Governor remains clueless and/or milquetoast enough to drive the state deeper into the monetary abyss. The Legislature is trying but it’s politics as usual, in most cases, to reach a solid cohesive consensus.

    Somebody has to take the bitter pill and increase taxes for MN to raise up out of economic crises and foreboding depression. Where is that dynamic, innovative leadership we hear about but never see?

    Gambling and slots are not the solution to shoring up Minnesota’s sinking sorry ship of budgetary affairs. Gambling is suppose to be an icing to the financial budgetary cake. Not a patch to a crumbling economic bulwark. One can’t gamble without money to play with.

    Tax reformation and ‘everyone’ paying their fair tax share of such is the only way to maintain budgetary solvency and balance. The inane policies that have dominated this state must cease or economic collapse, default, and depression is our future legacy.

    Economic politics and fiduciary policies as usual for Minnesota? If so, I am leaving this sorry sinking ship of affairs if no leadership is forthcoming. Where’s the life boat?

    This is no drill, the MN Titanic is sinking and one has to take care of family/loved ones if rescue is not evident. Is rescue for Minnesota on the horizon?

  7. Submitted by Eric Ferguson on 04/28/2009 - 01:43 pm.

    The whole reason the budget is so twisted in knots is simple: there’s no working with an absolute position of “no new taxes”. As much as the DFL plans suck, they’re also realistic, and Pawlenty’s obstinacy can only make things worse. We should all act like grownups and quite whining, legislators and governors included. Kudos to Bakk and Lenczewski for being the grownups so far.

  8. Submitted by Bernice Vetsch on 04/28/2009 - 04:59 pm.

    I’m afraid additional gambling opportunities would amount to a voluntary tax paid by — guess who? — those poor enough to dream of winning big enough to pay off their bills.

    Don’t the tribes have the legal right to all gaming? Thought I heard that once.

    Yes, DFL. Stand up. Get mad. Hold ALL negotiating sessions in a public place where all who listen can get mad at the person they should be mad at: the governor. Let him veto good legislation over and over until the voters see how rigidly ideological he really is.

  9. Submitted by shannon riley on 04/28/2009 - 09:47 pm.

    Doug Grow painted a portrait of the legislature this year which is frightening when you think of the power these individuals have in determining the services we Minnesotans receive and the taxes and fees we pay. Having faith in them is the real gamble!

    When I read about voluntary revenue offered by Racinos, I think “duh, take the cash — it’s a no-brainer!” After all, that’s not an expansion of gambling-it’s diversifying the tracks which have pari-mutuel and card rooms and state regulation already. It’s a modest proposal compared to the state running it’s own casinos! And 2 Racinos offer $1/4 Billion in tax revenue. Plus won’t the tracks have better racing, hire more people, spend more promotion money and with more success, pay even more taxes? Voila! Revenue streams!

  10. Submitted by Dick Novack on 04/29/2009 - 03:30 pm.

    A very insightful piece, Doug. Congrats.

    Both sides, especially the leaders who are basically far left and far right, have spent so many years in “gotcha politics” that they no longer understand the art of compromise. The lost art of political “Compromise” bills got us the revolution, the constitution, the bill of rights, the end to slavery, universal voting rights, success in several (old) wars – otherwise known as “patriotism”, a solution to the depression, a solution to the cold war, cutting edge transportation (Eisenhower era), space and its resulting electronics breakthroughs, and much more.

    It appears tht once the age of instant media arrived a few decades ago (after Lyndon Johnson) compromise died in favor of media grabbing digging in the heels.

    Perhaps a Minnesota constitutionally required “kumbaya class” for legislators and executive branch.

  11. Submitted by Richard Heil on 12/23/2009 - 09:01 am.

    Dated: December 23, 2009

    The 2010 legislative session will soon be starting this next January. The issue of a racino will be brought up again in this session. I have posted a considerable amount of material concerning Vikings stadium funding at the following location. This brings up a considerable amount on using gambling for funding and which ones are best. Maybe I can encourage you to check this out at;

    KFAN.COM rube chat politics & government

    racinos/OTB’s Which one is best?
    OTB/Vikings stadium funding parts 1,2,3
    OTB/Vikings stadium funding info & data

    this next material will be a repost from racinos/OTB’s Which one is best.

    In response to this last post is my response. Thanks again for your post.

    NOTE: Please check the following rube chat topics in politics & government.

    OTB/Vikings stadium funding parts 1,2,3
    OTB/Vikings stadium funding info & data

    The matter of building a new stadium from my perspective is not about buying a NFL owner a stadium. I am not in favor of building a stadium for any NFL owner but to have the stadium owned and managed as the metrodome is now. It is about keeping and promoting tourism for this area. The Vikings are a tourist draw for the twin cities area. This stadium will pull a number of events that would not be available to this area otherwise. This of course produces revenue in a number of different ways. Jobs, food & beverage sales, hotel rooms, car rentals, taxi/limo service and the list goes on. Businesses will relocate parts or all of their business once they have had a chance to visit and see certain areas after exposure to it because of some event. This area would do well if they could do a better job of showcasing itself. This stadium could be just a small part of a concerted effort to do just that, showcase this area. As I indicated in the above listed posts is the possibility that an Olympic summer games could be held here. A Super Bowl is also for sure a possibility as well. NCAA and other events are very possible on a collegiate level. The amounts of revenue raised can be many, many times the costs of this stadium. You may ask, why not keep the metrodome? Unfortunately the dome is a bit too small and it is a power hog. The energy that it takes to keep that roof up is very high and without many, many tenants the dome is just too expensive. It is more suited to a mid sized city that has a university and/or a number of colleges that can share it. Once the shovel was put into the ground for either the new Twins stadium or the new Gophers stadium the metrodome was doomed as economically feasible. Why a retractable roof? Because this roof will ensure that whatever party books an event at the stadium that the event can take place rain or shine or snow or whatever. To an event planner this is an extremely important detail. I can go on and on with this but again I will encourage you to check out those other posts.
    A second point was made about the matter of the Native Americans and I will answer this in some but not complete detail here.
    I wrote a report about bringing some sense to gambling and submitted it to select members of the legislature and governor Tim Pawlenty these last two legislative sessions. In that report I pointed out a few problems with the Native Americans and tribal gambling/gaming and also the problems with the racetracks and the Minnesota Racing Commission which is is an abusive and corrupt state agency. As I will state here that there is not only problems with the Native Americans but also state side gambling/gaming. For the purposes of answering your question regarding the Native Americans I will just focus on them right now.
    The Native Americans have a number of issues regarding the sovereignty of reservations that do need to be addressed.

    continued on next post

  12. Submitted by Richard Heil on 12/23/2009 - 09:04 am.

    continued from last post

    * the matter of civil lawsuits with the casinos and/or tribes

    * the matter of adherence to the National labor relations act ( laws concerning the rights of workers to collective bargain )

    * advertising promotions and actually giving away all of those promotions that are advertised

    * maintaining fair odds and fair standards for payouts at the casinos

    There is some other issues but this sums up the most of what are these issues. Notice that I do not bring up just how much money the casinos earn or anything about getting money from the state from casinos profits. I personally do not think it is viable to make demands from the Native Americans over these two issues.
    I did contact one of the main people concerning Native American gambling and Canterbury Park and in the absence of any other worker advocate I made the following proposal with these three included concessions for gambling workers.

    * that there be a worker advocates

    * that there be some kind of health care coverage for most workers

    * that there be 1% profit sharing from the net profit revenue split for all workers

    The proposals were never acted upon and as of now these concessions have not been adopted. There is some benefits for some workers in various ways but no form of profit sharing.

    Now outside of the problems with the racetracks and the Minnesota Racing Commission I also have as part of the report this information and suggestion for the Native Americans/tribes. Now there is many problems with the Native Americans with things like alcoholism, suicides, unemployment and a lack of opportunities regarding members of the Native American tribes. There is considerable dependency on the state of Minnesota/federal government by many Native Americans. The Native Americans do have gambling/gaming but little other opportunities. It is somewhat like a table with only one leg. I advocated that the Native Americans use some of their gambling profits to build more economic opportunities in conjunction with the state to alleviate some of this considerable dependency.

    continued on next reply

  13. Submitted by Richard Heil on 12/23/2009 - 09:05 am.

    continued from above post

    This could save the state millions and help the Native Americans to build a sub-economy that would be like building more legs for their table. My personal view is that the Native Americans have a short window of time in order to use gambling profits to build industries that can help them for the long haul.
    The state would be more than willing to help with this and the Native Americans do have advantages due to the sovereignty that they have on reservations that they could take advantage of. I admit that the Native American did and are doing some good projects but I believe that working with the state is essential. I don’t think we as a state can ask for money but we can demand as part of the Native Americans maintaining their slot/casino monopoly that the Native Americans make these investments in themselves. Instead we see some of the Native Americans using their profits for things like the TCF stadium ( 12 million ) , toys for tots ( $ 50,000 ) and a number of similar contributions. I suggested that these random contributions be ceased and that all contributions be used in a way that has some definite goals that can relieve some dependency on the state. So far the Native Americans have refused to negotiate in good faith with the state over gambling/gaming profits. The main problem is that the state lacks leverage in its dealing with the Native Americans.
    I feel that the racino is a very bad idea. It would maroon any chance that we can get the Native Americans to do these kinds of contributions/investments. It runs right at their monopoly. Instead I am advocating that we put OTB ( off track betting on horse racing ) back on the ballot for 2010. OTB does not run at the Native American monopoly. It can be used to build up the agribusiness in horse racing that is so weak in our state. I do suggest that these OTB’s be allowed to offer simulcast horse racing and also the poker card clubs like they currently have at the two racetracks. These OTB’s can be anywhere the state decides to license them. Using OTB/poker card clubs as a lever the state can then get the Native Americans to the table for some serious negotiations. Getting the right to license OTB does not mean that these licenses will be issued but they could be. This depends on where negotiations with the Native Americans go.
    My view is that we can make money off of slot/casino gambling via a racino or we can save money by
    encouraging investments that alleviate dependency on our state. I think we are better off by getting the Native Americans to contribute from 18 casinos rather than getting profits from two racinos that are surrounded by a number of casinos. In addition to getting Native Americans to help themselves we can as well get some revenue from OTB’s that we can use for a stadium. If the Native Americans still refuse to good faith negotiate then the state could turn OTB’s into racinos and then use a considerable amount of that revenue to alleviate this dependency. The Native Americans can do it or the state can then effectively take that monopoly away and do this themselves as a last resort. The state can win and the Native Americans can win as well. The racino will produce no winners except for the owners/stockholders of the two racetracks. Ultimately the state and its peoples will lose if we adopt the racino plan. A serious debate needs to be conducted in regards to this matter. We should not allow influences to derail this debate like we see now. Racino influences have everybody in the media under their thumb so this debate is not taking place but I am for certain willing to have this debate with anyone/anywhere ( provided that transportation is available to get me to set location ).
    Lives can be changed if we build up our tourism, get the Native Americans to invest properly and bring some sense to gambling/gaming in our state. Random actions that are not in conjunction with other related actions do little good and if fact great damage. I have advocated that people come forth and offer their opinions on this and certainly it is greater than that of just building some structure but instead structuring some path that can benefit everyone.

    Thanks again

    Richard Heil
    sometimes called cabbie

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