Harrah's and the Narragansett Indians promise voters that state property taxes will go down if the casino ballot amendment is approved, but others question the details.

01:00 AM EDT on Friday, July 7, 2006

BY KATHERINE GREGG
Journal State House Bureau

PROVIDENCE -- The latest full-page newspaper ad in the campaign to sell the proposed Harrah's-Narragansett Indian casino to voters has put the spotlight on one of the big unanswered questions surrounding the ballot proposal and its implicit -- but undefined -- promise of "property tax relief."

What does that mean?

Framed as an open letter to the governor from Gary Loveman, president and CEO of Harrah's Entertainment, and the Narragansetts' Chief Sachem Matthew Thomas, the ad states the oft-lamented fact that Rhode Islanders "currently pay among the highest property taxes in the country."

"If voters pass Question 1," the ad says, "they can be confident it will substantially reduce those rates."

But when asked yesterday to be more specific about the kind of "tax relief" a voter could expect, casino-campaign spokesman Jonathan Romano said: "property tax relief."

Asked what specifically that meant, the newly hired Romano said: "What does it mean to you?"

Asked if the "direct and substantial tax relief" promised in the ad was a promise, for example, to provide every Rhode Island property-taxpayer with a rebate check in the mail, Romano said: "I'll have to get back to you on that."

He did not.

But he repeated more than once the message that, he said, the ad was designed to convey: "Our presumption, again, is that this is going to be on the ballot and our belief is and hope is that it will pass, and when it does we are agreeing and staying committed -- we hope the governor can join us in our commitment -- that Rhode Islanders will receive the tax relief they deserve."

From the other side of the casino divide came this response from Gary Sasse, director of the business-financed Rhode Island Public Expenditure Council: "Taxpayers shouldn't take a proposal to reduce property taxes seriously until there are details."

"It's hard to see how anybody can guarantee property-tax relief because they don't control municipal spending," Sasse said.

Carcieri press secretary Jeff Neal said the allusion to property-tax relief, within the proposed amendment to the Constitution headed for the ballot, "is as much myth as the Loch Ness monster."

In a return letter to Loveman and Thomas, Neal said: "Property tax relief will only be possible if Harrah's is paying enough in taxes.

"Since this amendment requires no taxes to be levied whatsoever, and because Harrah's is only willing to pay an amount significantly less than we currently receive from Lincoln Park and Newport Grand, it seems clear that the Harrah's casino will actually result in property tax increases."

The debate -- and voters will hear more of it -- stems from the many questions state lawmakers opted to leave unanswered in the Harrah's-crafted casino proposal they agreed to put on the Nov. 7 ballot.

The three-page measure asks voters to add a new Section 23 to the state Constitution giving exclusive casino rights to a resort-casino in the town of West Warwick owned and operated by "a business entity" established by the Narragansett Indian tribe and "its chosen partner."

The legislation does not specify how much the casino would have to pay in taxes and how much, if anything, its owners would have to pay for the license.

All it says is: "The per annum tax rate shall be established by the General Assembly with all such tax proceeds to be dedicated to property-tax relief as prescribed by statute."

Last month the casino lobby's Web site -- LetRIDecide.Org -- said: "Rhode Island voters need to know the tax rate in order to make an informed ballot decision." But House Finance Chairman Steven M. Costantino has been quite adamant in saying those negotiations will not take place until after the November vote.

House spokesman Larry Berman said again yesterday: "We haven't worked out any details on property taxes yet. It's going to be worked out after-the-fact."

In this vacuum, the Harrah's-backed group calling itself "Rhode Islanders for Jobs and Tax Relief" is touting Harrah's offer of two years ago to pay the state a tiered tax rate ranging from 25 percent of the first $400 million in gross-gaming revenue up to 40 percent on every gambling dollar over-and-above $1 billion.

By way of comparison, the state gets close to 60 cents of every dollar from its two hugely successful slot parlors that last year generated $245 million for the state, compared with the $205 million Connecticut derived from the Foxwoods casino and the $213 million it got from the Mohegan Sun.

Harrah's has not released its own detailed market study showing the number of gambling visits required -- and the amount each gambler would have to lose per visit -- to make its own projections.

But it has based its advertised promise of "$144 million a year in new revenues for property-tax relief by the third year of operation" on the projections of Clyde Barrow, Ph.D., at the University of Massachusetts/Dartmouth.

In an unsolicited report he provided the House Finance Committee in May, Barrow made several assumptions, including the July 1, 2009, opening in West Warwick of a resort-casino comparable in size to Caesars Atlantic City, but "roughly half the size of the Mohegan Sun Casino in Uncasville, Conn. . . . in terms of total casino space, number of slot stations and number of hotel rooms."

By 2012-13, when the casino is in its fourth full-year of operation, Barrow projected a potential $144.4 million payout to the state on $560 million in casino-gambling revenue, if Harrah's is allowed to pay the tiered rate it proposes.

His study showed business at Lincoln Park and Newport Grand dropping sharply -- and then edging its way back up to where it is now -- during this same time.

Yesterday's ad said, "They would have preferred that the current legislation specify tax rates, but it did not."

Nonetheless, "it would be completely misleading to suggest the final rates could be lower than those we agreed to. We are writing this letter to commit to you, the General Assembly, and the citizens of Rhode Island, that we will pay, at a very minimum, those tiered rates of 25 [percent] to 40 percent."

In the return letter he sent on Carcieri's behalf, Neal said: "Your willingness to publicly 'commit' to a tax rate is clear demonstration that . . . Harrah's expects to make all the decisions. And Harrah's is right to think that. Once the Constitutional amendment has been approved . . . Rhode Island will have absolutely no leverage to negotiate a tax rate or anything else."

Speaking for the new anti-casino group, "Save Our State," spokesman Tim Costa said: "The only one with a reduced tax rate I see is Harrah's," compared with what Lincoln Park and Newport Grand pay.

"They seem to be dictating what they are willing to pay," said Costa. "Outrageous."

kgregg@projo.com / (401) 277-7078