OP-ED | Balancing Budget On Sin Taxes is Shortsighted, Reckless
Ever since Gov. Dannel P. Malloy punted an unfinished budget to the legislature later than the usual deadline, legislators have been searching for ways to raise revenue without explicitly raising taxes.
So far, legislators have been looking at ways to counteract declining sin tax receipts as a way to balance the budget, which include the addition of new casinos and the legalization of keno. The term sin tax refers to tax revenue from alcohol and tobacco sales (and may soon include sugary drinks) and casino revenue sharing, which totaled more than $721 million last year.
The thought process behind most sin taxes is that increasing the price of goods and activities that most of society looks down on will discourage people from purchasing such goods and engaging in such activities and will give the government funding to help address the greater societal costs of such goods and activities. From the perspective of legislators, the added bonus of such taxes is the fact that some of the money, or in some cases all of it, can be used towards this state’s general fund to help balance the budget. As we have seen in Connecticut, this added bonus can be quite useful when we face a large budget deficit.
To increase revenue from alcohol, Gov. Malloy and lawmakers want to expand package store hours and get rid of minimum bottle pricing to help boost liquor sales. Through these changes, the state expects to achieve a $3.3 million bump in liquor tax receipts. However, these changes are modest, similar to the approval of Sunday liquor sales in 2012, which was expected to yield an extra $5.2 million that never materialized. It seems that expanding hours just changes when people buy alcohol, instead of the amount people buy.
When it comes to gambling, the state has seen its share of casino revenues steadily decline since reaching a high of $430 million in 2007. Last month, MGM Resorts International broke ground on a new, $800 million casino just over the border in Springfield, which is expected to significantly cut into the revenue from Connecticut’s casinos. To help combat this inevitable decline, the Public Safety and Security Committee has approved a bill that would allow up to three new casinos in Connecticut, at the urging of the Mashantucket Pequot and Mohegan tribes. If this legislation becomes law, the first of these casinos is likely to be built north of Hartford along Interstate 91.
The problem with these new casinos is the fact that they are only going to have slot machines, which are considered to be one of the most addicting forms of gambling. At least full-fledged casinos, like the ones that currently exist in Connecticut as well as the one proposed for Springfield, include restaurants, shops, and entertainment to help make them worthwhile. MGM’s Chairman and CEO seems to be correct in his assessment of this new proposal as a “box of slots.” Luckily, officials in Enfield and Windsor have made it clear that a casino is not welcome in either of their communities.
There also is a chance that this new legislation could lead to more than just three new casinos. On Wednesday, Attorney General George Jepsen warned legislators that court challenges could potentially open the door to additional casinos if another Connecticut tribe gains federal recognition. If more casinos were to open in Connecticut, the new casino in Springfield will be the least of their worries.
Lawmakers and casino advocates have tried to make the issue of casino expansion about jobs, when it is really about the state’s share of casino revenue. If legislative leaders were really concerned about keeping jobs in Connecticut, they would not be approving bills like SB 1044, which would fine large employers who pay employees less than $15 per hour. The General Assembly needs to stop enacting first-in-the-nation business regulations that make it more difficult for Connecticut to compete economically with other states.
When our lawmakers and state officials are hoping for people to buy more alcohol and gamble away more money in order to balance the budget, we have a problem. In response to the new casino in Springfield, Senate Majority Leader Bob Duff, D-Norwalk, said, “Massachusetts has declared war on us and we are going to fight back.”
Why not save the outrage and fight for proposals that will actually help move our state forward and grow the economy rather than double down on a shrinking market.
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