But just how lawmakers arrived at their tax-relief estimates is unclear and the lawyer who derailed previous casino ballot questions cites "major legal problems."

01:00 AM EST on Friday, March 24, 2006

BY KATHERINE GREGG
Journal State House Bureau

PROVIDENCE -- Legislative backers of the proposed West Warwick casino are dangling the promise of $119 million to $144 million in "property-tax relief" for their cities and towns back home.

The promise was contained in one of the handouts the casino's legislative backers provided at the news conference earlier this week to trumpet their campaign to change the state Constitution to specifically allow the Harrah's-backed casino.

The handout shows communities getting anywhere from $1.6 million in new money on Block Island to $22.9 million in Providence under the rosiest scenario.

"I just want to make sure that the money goes to the average person that owns a house, is paying all the taxes. . . . And I think this is the only possible way to get that money back," said Rep. Jan Malik, D-Warren, the lead sponsor of a companion bill dedicating any new casino dollars to "property-tax relief."

But none of the legislative backers could explain exactly how they arrived at the numbers.

The state's chief budget analyst, Peder Schaefer, said the suggested allocation bears little resemblance to the "revenue-sharing" formula the state used to allot $51 million in municipal aid last year.

"We don't understand what they have done," said Schaefer yesterday. "Whether the $144-million figure is any good or not, I don't know. . . . But it ends up, they are giving all the rich communities a much bigger share of the money."

And Joseph Larisa, the lawyer who led Governor Carcieri's successful legal drive to keep two earlier versions of the casino proposal off the ballot, said the new legislation offers "phantom property-tax relief" while opening the state to "major legal problems."

As the legislation is written, he said, the state would be vulnerable to the same argument Harrah's made in another state where it has an affiliation with an Indian tribe: that the tribe's sovereign-immunity precludes the state from enforcing its laws. "It is very disconcerting to see this proposed constitutional amendment," Larisa said. "There is no clear waiver of sovereign immunity."

The casino backers nonetheless picked up another major booster yesterday: Senate President Joseph A. Montalbano.

Though the latest proposal calls for a public vote to change the state Constitution before key casino details -- such as tax rates, license fees and minimum-investment requirements are settled -- Montalbano said: "I'm comfortable."

"As I've said all along: in the light of the two Supreme Court decisions, it's the only way that the people are going to be able to make the decision."

A fellow Senator, Republican David Bates said: "Forget it. It doesn't make any sense. Why should people vote on something when they have no idea what we're going to come up with."

But Montalbano said: "The details-later is fine with me because we will have a lot to say about what the details are."

The powerful Senate leader voiced his support a day after House Speaker William J. Murphy, D-West Warwick, voiced his own.

"The due diligence that we've done up to this point convinces me that a lot -- and I mean a ton of Rhode Island money is going to Connecticut. I would like to see that stay within the borders," Montalbano said.

He said it would "be hypocritical of me . . . to take some kind of moral position" against the proposed casino when the state already "relies so much on gambling."

Montalbano said the legislature's commitment a year ago to insulate the Lincoln Park greyhound track-and-slot parlor against losses to a casino assuaged his own concerns about job losses in his district, which includes a slice of Lincoln.

When asked how much of the new money that might take out of taxpayers' pockets, Montalbano said: "Stay tuned. It may not be the state. It could be the casino operators. We'll see. First the people have to say they want a casino."

Meanwhile, Harrah's officials provided some insight into the new financial-projections the legislators have been trumpeting.

Two years ago, the nation's largest casino-operating company wowed a Senate committee with the promise of millions in new gambling revenues.

By the third year of operation, Harrah's projected its new casino generating $504 million in gross gambling-revenue with the state getting 25 percent -- a potential $128 million from the casino alone.

After taking into account the millions the new casino might siphon away from Lincoln Park and Newport Grand, Harrah's still figured the state would net $122 million more from the three gambling establishments in 2009 than the slot parlors alone were likely to generate in 2006.

The new best-case scenario shows the state getting $144 million in net new gambling taxes if the new casino has no measurable impact on the business at the two slot parlors, and $119 million if the casino only lures $25 million of their business away.

Harrah's lawyer and company executive David Satz said he did not know the genesis of the suggested "property-tax relief" chart, because "it's not ours." But he said the $144 million reflects Harrah's plans for a bigger investment in a bigger casino.

The last proposal called for a $650-million investment in a casino with 3,000 slots that produced $504 million in after-payout revenue. He said the new proposal anticipates an additional $350-million investment in a casino with an additional 500 slots and $560 million in what the industry calls gross gaming revenue.

Governor Carcieri, meanwhile, reaffirmed his opposition to rewriting the Constitution "to help an out-of-state gambling company make a buck off the people of Rhode Island. The state Constitution is designed to protect the rights of Rhode Island citizens, not the business interests of gambling executives from Las Vegas or New York," he said.

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