Fight in House starting to center on VLTs

79TH LEGISLATURE
Lawmakers hear debate on financial potential versus social costs

By Jason Embry
AMERICAN-STATESMAN STAFF
Wednesday, February 23, 2005

The growing fight over expanding legalized gambling in Texas took center stage Tuesday at the Capitol.

Horse- and dog-racing industry representatives described the legalization of video lottery terminals at racetracks as a lifeboat for lawmakers who want to increase state revenues but do not want to raise taxes. Gambling opponents say the terminals, which are similar to slot machines, will drain money from existing businesses and encourage the types of addiction that tear families apart.

While lawmakers are floating gambling proposals ranging from the sale of lottery tickets at gas pumps to the construction of Las Vegas-like casinos across the state, the prospect of video lottery terminals has created the most intense debate. By some estimates, the state could take in $1.2 billion a year in profits from the machines, though critics challenge those numbers.

Representatives of both sides of the issue took their cases to the House Ways and Means Committee, which took no action.

The issue looks particularly dicey for Republicans, who will be in political hot water if they raise taxes but also want to deliver enough new education money to their local schools and find a way to offset property taxes. They face heavy pressure from the party's grass roots to stop the lottery terminals.

Gambling opponents on Tuesday pointed to figures that show that low-income Texans spend significantly more money on gambling every month than those with higher incomes. Texans who earn between $20,000 and $29,000 a year, for example, spend $106 a month on the state's lottery, on average, while those who earn between $76,000 and $100,000 spend less than $29 a month on average, according to state figures cited by gambling opponents.

"It would be wrong, both from a fiscal and a moral point of view, to adopt a tax scheme that will be dependent on the lowest income-earners in the state to fund our most critical state programs," said Suzii Paynter, director of public policy for the Christian Life Commission of the Baptist General Convention of Texas.

Racing officials, however, said people are going to use the machines anyway.

"These people live in Texas already," said Howard Phillips, president of Manor Downs. "They're just going (to other states) to do it, and other than selling them some gas when they drive there, I don't think we're getting any benefit."

Racing advocates also say a growing number of horse owners are breeding their animals in Louisiana, where they can compete for prizes that are boosted by the machines.

Rep. Kino Flores, D-Palm- view, has filed a bill that would expand casinos in the state (there is one Indian-run casino in Eagle Pass), but he said the legalization of lottery terminals will pay faster dividends.

"Would you rather have the opportunity to go play a game of chance and let the state keep $5 worth, or would you rather the state force you to give it five bucks?" he asked.

But gambling opponents said video lottery terminals would attract compulsive players who would neglect their jobs and their families. Rhenel Johnson, a Houston pastor, said a single mother in her church inherited $10,000 but squandered that money by playing slot machines.

"It was so bad that her children would call her on the cell phone and ask her to come home," Johnson said.

House Speaker Tom Craddick has said the fate of gambling legislation will be up to the full House, while Gov. Rick Perry has distanced himself from a plan he floated last year to legalize the machines to help pay for schools.

Ways and Means Committee Chairman Jim Keffer, R-Eastland, said he hopes the committee will approve a bill next week that spells out which taxes the Legislature will raise to make up for the one-third reduction in property taxes that state leaders want to deliver as part of their overhaul of the state's $33 billion school finance system.

The legalization of video lottery terminals, which is expected to need approval from two-thirds of the Legislature and from a majority of the public, is not expected to be part of that bill. But it could arrive on the floor of the House separately if House leaders decide they need more money for education, health care or other priorities.

The gambling testimony came a day after Rep. Jim Pitts, R-Waxahachie, filed a bill that would replace the local property tax for school operations with a statewide tax. Proponents say it's the best way to ensure that schools have the same amount of money for each student.

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http://www.statesman.com/news/content/shared/tx/legislature/stories/02/23gambling.html