Operating a huge business such as a casino is expensive — not just for the company that owns it, but also for the municipality where it's located. While large companies often seek tax breaks and other concessions in exchange for creating jobs and adding to the local economy, cities have to find ways of funding the additional services that go into sustaining those businesses. Such is the case for Harrah's Casino in New Orleans.
While the city bears the burden of paying for police protection and other public services that support Harrah's, the casino pays the state a substantial gaming tax. An April story by CNBC found that Louisiana has the fifth-largest state gaming revenue in the country, while New Orleans is the 15th-highest market for gaming revenue. A 2012 study published by the University of Las Vegas' Center for Gaming Research showed that Louisiana casinos have been paying more than $500 million annually to the state since 2005.
What does New Orleans want in return? Just a guarantee that the state will chip in for basic services that otherwise would be paid by local taxpayers. What does the city actually get from the state? Since Gov. Bobby Jindal took office, not much.
For the fifth consecutive year, local lawmakers have worked to secure a permanent source of funding for the investment the city makes in Harrah's. Each time a funding bill has passed the Legislature — and each time it has been vetoed by Jindal, who has then scrounged for funds to cover some but not all of New Orleans' expenses. This is unacceptable. When lawmakers passed the original casino legislation in the 1990s, the state signed a contract requiring it to pay the city $3.6 million a year for support services. That's a paltry sum in a state budget of more than $25 billion, but vetoing that money puts a huge burden on the city. Moreover, the actual cost of those services currently exceeds $7 million a year.
This year's attempt at securing permanent funding is House Bill 389 by State Rep. Walt Leger III, D-New Orleans, and state Sen. J.P. Morrell, D-New Orleans. HB 389 would create a special treasury fund called the Casino Support Services Fund, which would send the first $1.8 million of gaming revenue to New Orleans to pay for extra fire, police, sanitation and other necessary services related to Harrah's. The next $60 million would go to the Support Education in Louisiana First (SELF) Fund, which was established in 2001 for state schools. The next $1.8 million would go to the casino services fund to bring the total to the contractually obligated $3.6 million — still only about half of what the city spends.
The bill sailed through both houses of the Legislature with bipartisan support. It now sits — as its predecessors did — on Jindal's desk. "I've spoken to him this year about the bill and how important it is to the city of New Orleans," Leger told Gambit. "With the assurance that this money is coming in, the city can plan its budget accordingly and won't have the uncertainty of going back to the Legislature year after year."
What's different this year is that the bill arrived on Jindal's desk in mid-May — the earliest ever. By law, a Louisiana governor must sign or veto a bill within 10 days of receiving it (unless it arrives within 10 days of the end of a session, in which case he has 20 days). If the governor neither signs nor vetoes the measure, it becomes law automatically. Before the end of May, Jindal must sign, veto or make no move on HB 389.
We hope the governor will finally do right by New Orleans and sign HB 389. He has hinted at supporting similar legislation in past years, only to veto it after lawmakers adjourned. Now he'll have to make a decision while they're still in session — and able to override a veto. In the final days of legislative sessions, lawmakers' nerves often get frayed as they haggle over the budget and other controversial matters. Politically and morally, Jindal should sign the bill. He can't risk an override, and even the most ardent conservative can't run for president on a platform of being "anti-city."
New Orleans should be compensated for the services it provides to the state's only land-based casino — and it should be free to budget with confidence, knowing those funds are guaranteed each year. Both chambers of the Legislature agree. We hope this year Jindal finally agrees, too.