Gov. Doug Ducey at the Jan. 7, 2019, inauguration. Photo by Jerod MacDonald-Evoy | Arizona Mirror
I’ve got to hand it to Gov. Ducey: He really knows how to back Democrats into a corner.
He put them in a bind five years ago with Proposition 123, which increased payments to schools from the state’s land trust fund in exchange for ending a lawsuit over unpaid inflationary funding.
The deal made it possible for Ducey to avoid tax increases or rollbacks while still claiming victory on education funding, even though the settlement only funded 70% of what GOP lawmakers shorted schools.
Some Democrats balked, but education advocates jumped on board because, after a billion dollars in education cuts, they were desperate for funding and 70% was better than continuing their years-long court battle.
By using their allies against them, Ducey was able to score a legislative win without having to engage Democrats. And now, he’s doing it again, this time with the state’s Native American tribes.
The gaming compacts between the tribes and the state are expiring soon, making updated compacts an imperative. But instead of forwarding these new compacts as standalone legislation, the governor has linked them to a bill that would greatly expand gambling, both on and off tribal lands.
I’ll leave it to others to debate the moral pros and cons of a gambling expansion. My objections revolve around two key issues, both of which should alarm Democrats and any Arizonan who favors fairness over cronyism and regressive taxation.
The first issue involves the expansion of off-reservation gambling, namely the legalization of professional and college sports betting.
New legislation allows tribes and a small number of other individuals to apply for licenses to operate sports wagering sites. The licenses promise to be lucrative. After Colorado launched sports betting last May, the state set records with $1.5 billion in wagers.
But not just anyone can apply for these coveted licenses. The non-tribal licenses are restricted to a handful of influential Arizonans: the owners of the state’s professional sports teams or franchises.
Several politicos have questioned why the state would essentially gift licenses to sports team owners, especially since Arizonans have already gifted them with taxpayer funded stadiums.
I’m sure it’s only a coincidence that some of these owners also happen to be major contributors to Ducey’s campaigns and pet projects. And while I’m not surprised Ducey would subscribe to this type of cronyism, I am surprised Democrats would acquiesce.
I’m also surprised that legislators in both parties seem willing to give up control of taxation policy.
As it stands, the bills confer responsibility to the Department of Gaming — not the Legislature — to set license fees and determine the tax rate on new gambling revenues.
Because we do not know the value of the fees, which could range from a few hundred dollars for a license to tens of millions, or the percent at which gambling revenues will be taxed, we’re left guessing at how much money the state might collect from the expansion.
Nor do we know what will be funded as a result of those new revenues.
Generally, so-called “sin taxes” are earmarked for programs that offset the so-called sin, such as programs that provide individual assistance (i.e. Gamblers Anonymous) or societal benefit.
As an example, the taxes collected from the newly legalized sale of recreational marijuana are allocated to law enforcement, community colleges, transportation, and other criminal justice and health programs.
But this legislation lacks earmarks. Instead, revenues are dumped into the state’s general fund.
While legislators could use that money to address some of the state’s crises, such as homelessness or housing affordability, it’s practically guaranteed the money will be used instead to offset tax cuts.
In fact, the governor and Republican legislators have already proposed doing just that.
Ducey asked the Legislature for $600 million in permanent income tax cuts over the next three years — a figure that could increase to $1 billion. And you can bet some of those cuts will benefit the wealthiest Arizonans, including the sports team owners who stand to make millions off of legalized sports betting.
This doesn’t have to be a foregone conclusion.
The governor needs Democrats to pass this legislation, because not all Republicans are on board.
I understand why Democrats want to back the tribes. But they also need to consider their other constituents, especially the ones who will pay the price for more regressive taxation and the continuation of underfunded state-run institutions, including our schools.
Democrats in the state House — with the exception of three — already voted to pass the bill as is, with exclusive licenses for pro sports team owners and without dedicated allocations or any promise by the governor to veto future tax cuts.
Senate Democrats do not need to do the same. They should play their hand and insist on a better deal. That is, after all, why we elected them.
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