Some lawmakers are leery of altering the state's Constitution for a particular corporation, project or tax rate.

01:00 AM EST on Sunday, January 22, 2006

BY KATHERINE GREGG
Journal State House Bureau

PROVIDENCE -- The push is on to change the state's Constitution to give the world's largest casino-operating company -- Harrah's Entertainment -- a long-sought foothold in Rhode Island.

And you can count Rep. Anastasis Williams of Providence among those who say they would take this extraordinary step if that is what it takes to finally get the proposed West Warwick casino on the ballot.

"As far as changing the Constitution," she said of the draft-bill that was being circulated by West Warwick Town Solicitor and Rep. Timothy A. Williamson last week, "I am for it, providing it is for all the right reasons.

"And I am confident and I trust that when my colleague Representative Williamson makes a move . . . it, definitely, has all the right ingredients," Williams said.

But House Speaker William J. Murphy has been conspicuously silent so far about the constitutional amendment that Williamson is proposing to clear the way for a Harrah's-backed Narragansett Indian casino in Murphy's own hometown.

House Majority Leader Gordon D. Fox has raised concerns about the specter of "protectionism" for "one corporation over another."

Senate President Joseph A. Montalbano, another previous supporter of letting the people decide, has acknowledged his own qualms about using the state Constitution to lock down the casino owners' tax rate for a minimum of 10 years.

"What do we do in 10 years: change the Constitution again to get a higher rate?" he wondered aloud last week. "I see that as problematic."

Added Rep. Raymond Gallison, D-Bristol, who cosponsored the last two casino referendum drives: "I am not going to be one of the sponsors this year,"

Gallison said he was comfortable "letting the people decide" until the legislature last year made a pact with Lincoln Park and Newport Grand to freeze, for 10 and 15 years respectively, the slot revenue the two pay the state at more than twice the percentage the casino would pay.

"They are our partners," Gallison said. "We should be helping them, not hurting them." And he is not the only defector.

In interviews last week, a number of legislators who voted in the past to put the casino proposal on the ballot said they, too, were unlikely to support the new drive to rewrite the Constitution.

"I want the people of the state of Rhode Island to vote on this particular issue, but I have a real problem and distaste with changing the state Constitution for what comes down to a matter of money," said Rep. Arthur Corvese, D-North Providence.

In short, the casino lobby wants to exempt the proposed West Warwick casino from what the Rhode Island Supreme Court has twice, in the last two years, interpreted as a constitutional ban on any new privately operated gambling.

The high court's ruling was based on the 1973 repeal of a 130-year-old ban on lotteries and the adoption in its place of the current provision in the state Constitution that allows "lotteries," but only state-operated ones.

Adopted years after Lincoln Park and Newport Grand opened their doors, that 1973 amendment paved the way for the legislature's creation of the state Lottery a year later.

That state-only proviso has since emerged as a legal obstacle to the casino.

The West Warwick proposal was headed to the ballot in 2004 -- with 41 of 75 House members sponsoring the referendum drive -- when the Supreme Court ruled it unconstitutional.

The high court ruled then -- in response to an advisory opinion request from the governor, and again last year in response to a request from the House -- that a privately operated casino was the equivalent of a "lottery" and thus banned under the state Constitution.

The joint resolution that Williamson plans to introduce in the House this week seeks to get around this obstacle by adding new language to the Constitution.

Voters would see this proposition on the November ballot:

"Approval of this amendment to the state Constitution will authorize a casino gaming facility in the town of West Warwick, to be privately owned and operated in association with the Narragansett Indian Tribe, with tax proceeds from the casino being dedicated to property-tax relief for Rhode Island citizens, and will permit future privately owned and operated casino gaming facilities in this state only upon further vote of the people."

If a simple majority said yes, a new "Section 23" would be added to the Constitution that would:

Lock in, for at least 10 years, the tiered tax rate, starting at 25 percent of net gambling revenues, that the casino would pay the state. By comparison, the state gets close to 60 percent of the net slot revenues at Lincoln Park and Newport Grand.

Earmark all gambling-tax revenue from the casino, during this 10-year period, to an unspecified "property tax relief" program.

Carve out an exception so lawmakers -- now banned from boards and commissions by another recently added section of the Constitution -- could appoint four of seven members of a newly created "gaming commission."

The draft-bill never once mentions Harrah's, the Las Vegas-based casino titan that would finance and build the $600-million-to-$650-million "resort-style casino" in a West Warwick industrial park, off Route 95.

"Like the people aren't going to know," Harrah's Senior Vice-President Jan Jones says, laughing.

Jones, a former Las Vegas mayor, has these answers for critics:

"Why a constitutional amendment? Because the Supreme Court pointed to that as the only course that will really allow the people's vote to become effective."

Why omit mention of Harrah's? "Because it is the partner of the Narragansetts. What if we decide we don't like the final outcome, but the Narragansetts want to go forward. You know, it is the Narragansett casino. . . ."

And, "I think there was a real discomfort," she said of lawmakers' feelings about naming Harrah's in the Constitution.

"There is is one thing about having the Narragansetts in the Constitution, who are, you know, as Rhode Island as Rhode Island can be. They really didn't want a private company . . . and I really think it is irrelevant."

To those who question using the Constitution to set the tax rate of an individual business, Jones said: "When the people voted before on casinos . . . one of the issues was that they didn't have enough information.

"I really do think this is the cleanest way for the public, with full disclosure, on all of the elements to make a decision, and I have confidence . . . they will make a reasoned decision."

She also has a response for those lawmakers -- including House Finance Committee members Gallison and John Patrick Shanley, D-South Kingstown -- who worry about the "slippage protection guarantee" the legislature gave Lincoln Park and Newport Grand last year. They were promised the state would make them whole if a new casino cut their revenue growth.

Don't worry, Jones argues. In building a destination resort, "there is no question that the only people who will suffer will be Mohegan Sun and Foxwoods."

Beyond that, she said: "To make them whole, all they are really saying is: we will reduce your tax burden. But if the state, at the end of the day, still is getting $350 million in tax revenue from gaming, instead of $250 million, the state's ahead."

That argument has, of course, been one of the heated points of dispute.

But Jones says she has "no question" that the state would come out ahead with a third player on the field because "you have a billion [dollars] of gaming revenue that drives through Rhode Island every single day to go to Connecticut.

"If you stop even half of that revenue, you are ahead," she said.

To those queasy about changing the Constitution, she said: "The elected officials are not changing the Constitution. . . . Only the people can change the Constitution. And if, in their wisdom, they think it is not a good deal, they won't do it."

CONSTITUTIONAL changes are not uncommon. The last -- two years ago -- was the much-heralded separation-of-powers amendment, which knocked lawmakers off scores of boards and commissions in the name of better government.

Since the Constitution's adoption, in May 1843, about five dozen amendments have dealt with such issues as felon office-holding and voting, shore use, ethics in government, term limits for top state officers, merit selection of judges, and legislative compensation.

Casino backers see a disconnect between Republican Governor Carcieri's strong objection to putting the casino proposal on the ballot -- in any form -- and his ardent support for voter initiative, a mechanism that in other states has allowed citizens to put such highly charged issues as same-sex marriage on the ballot by petition.

Asked again last week how Carcieri reconciles these positions, spokesman Jeff Neal said: "He does not believe that unconstitutional questions should be put on the ballot."

"The last two were ruled unconstitutional," and "we have reasons to believe that the latest proposal has constituional flaws," Neal said. "I am not going to elaborate."