Casino Tax Revenue Falls Short Of Projections

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Casino taxes are falling short of projections(Photo: WOSU Archive)
Casino taxes are falling short of projections(Photo: WOSU Archive)

When voters went to the polls to approve or reject casino gambling four years ago, they did so with the expectation of a rich new source of revenue for the state. Projections said casinos would earn nearly $2 billion a year. Now that the four casinos are operating tax revenues have not lived up to expectations.

The state Department of Taxation came up with the original tax revenue calculations. But no one from that agency would speak on tape about projections versus realities. So I turned to the city auditor of Columbus – Hugh Dorrian – who has some 45 years’ experience. He says that even though revenues are below expectations, the taxation department did the best they could.

“I think they did a reasonably good job because this was a brand new, unique venture in the state of Ohio. They had no home state experience to look at to make an educated guess,” Dorrian says.

There were a lot of projections made about gaming revenue, Dorrian says.

“Quite frankly they were all over the lot. I remember 3 or 4 years ago we were looking at projections and came up with a best guess you might say. I often say that when you’re making projections you’re living in a world of guesses,” Dorrian says.

Hugh Dorrian is known as a cautious, conservative auditor, so he was careful not to place too much reliance on tax revenues that would come in from casino gambling. As it turns out, Dorrian made the right call.

“If you look back four or five years ago when some original guesswork was going on and you look at actual collections today collections today are 35 to 40 percent less than what the original guesses were a few years ago,” Dorrian says.

The four Ohio casinos have yet to take in $2 billion dollars annually which means tax collections by the state are lower than expected, too. Ohio gets 33 percent of the money that the casinos take in. The money is divided up and allocated according to state law. What’s Columbus’ take? Auditor Hugh Dorrian.

“In 2013, I estimated that Columbus would receive $10.1 million. We actually received $10.2 million. In 2014, I’m estimating that there will be an increase. We should receive somewhere around $11.2 million this year,” Dorrian says.

Some of that money goes to pay for Nationwide Arena; some to principal and interest on city bonds; some goes to West Side redevelopment.

“That leaves about $6.6 million for what we call the general operations of the city. That $6.6 million will make up slightly less than 1 percent of our grand total of the budget,” Dorrian says.

…which works out to be a drop in the city of Columbus’ budget bucket. Dorrian readily admits he voted against statewide casino gambling “four or five times,” he says. But he adds that the city’s better off having that source of revenue.

“My gut feeling in only the few years that we’ve had to look at is that it’s probably monetarily a plus,” Dorrian says.

But casino tax money is still not enough to offset the cuts the legislature made in allocations to Ohio municipalities. Columbus, Dorrian says, took a big hit…

“We’re talking about $35 million to $40 million a year of monies that flowed to the city of Columbus. That’s difficult to manage when you get those big hits like that so I’m glad to have the casino monies. They don’t make up for all those state cuts but they help mitigate them a bit,” Dorrian says.

Dorrian says there’s a lesson to be learned.

“I think the lesson all of us should learn is to don’t place too much reliance on untested revenue streams when you’re putting your budgets together,” Dorrian says.