Ohio racinos mean less money for cities, counties

Associated Press

CLEVELAND

Declining casino revenue has cut into the take for local governments, and now the growth of racetrack slots gambling is diverting some of that money from cities and counties to schools.

The switch has made some local governments wary of allocating uncertain casino money for mandated expenses such as courts, elections and jails. Instead, they are using the money for extra items such as one-time building projects, economic development and port projects.

The double whammy of casinos generating less tax money than forecast and a shrinking city-county share of casino taxes has emerged as a sobering lesson in local government-finance planning across the state.

“Everybody’s not going to get what they thought they would get,” said Commissioner Daniel Troy in Lake County, which has a $52 million annual budget and netted $2 million in casino taxes. Lake County’s casino take has dropped almost 3 percent in the past six months as overall casino revenues fell and the number of school-benefiting racinos doubled to four.

By year’s end, Ohio will have three additional racinos, including one in Austintown, for a total of seven, along with the four casinos in Columbus, Cleveland, Toledo and Cincinnati.

The overall casino tax pot is shrinking. The Ohio Department of Taxation will be distributing $68.6 million, the local cut of the taxes collected from casinos from October through December. That was 2.2 percent less than the last quarterly disbursement.

On the racino side, the October-December take was $28.1 million, up 25 percent from the July-September take of $22.5 million. The third and fourth racinos opened only in December.

A 2009 state projection envisioned a declining city-county casino tax pot if seven proposed racinos were created. The bottom line predicted racinos would cut the city-county casino take by 27 percent.

The projection, based on overly optimistic forecasts as Ohio embarked on a new venture, said annual tax revenues from four casinos would top $640 million, with host cities sharing $32.2 million. But actual revenues, based on the fourth-quarter 2013 distributions announced in January, are 57 percent less.

Casino taxes going to counties also are off 57 percent compared with the projections, which drafters said reflected bad assumptions, such as how big the Cleveland casino would be and how long it would take to recover from the recession.

Local-government officials across the state are learning to come to grips with casino-tax revenues that could flatten out or decline, but it’s still added revenue, according to Brad Cole, research director with the County Commissioners Association of Ohio.

“It’s money they weren’t getting five years ago,” he said.

The 33 percent tax on gross revenues at the four casinos is split seven ways, with most going to Ohio’s 88 counties.

After 51 percent goes to the county fund, 34 percent goes to public schools and 5 percent to the casino host cities, which also get a share of the county fund. Three percent each goes to the casino and racing commissions and 2 percent each to gambling-addiction services and law-enforcement training.

The split was written into the Ohio Constitution as part of the 2009 voter-approved amendment legalizing casino gambling.