The Democratic leader of the Iowa Senate says Republican Governor Terry Branstad either doesn’t remember or is “deliberately misleading” Iowans about the state tax on what used to be riverboat casinos.
Branstad is calling for a tax rate of 36 percent on all state-licensed casinos, saying that’s the rate originally agreed to years ago. Senate Democratic Leader Mike Gronstal says Branstad must have a “faulty memory.”
“The tracks agreed to a 36 percent tax and the riverboats were at 20, so it’s not what was agreed to in the original legislation,” Gronstal says. “But they’ve got a faulty memory about a lot of things.”
In 1994 the state’s race tracks were allowed to open slot machine casinos, with the agreement the taxes for those tracks in Altoona, Council Bluffs and Dubuque would go up gradually, to a top rate of 36 percent. There eventually was a court battle, as the tracks objected to the much lower rate the other so-called “riverboat” casinos were paying — and the tracks won their case and got their tax rates lowered.
In a written statement, Branstad spokesman Tim Albrecht said the caisnos which began as “riverboats” no longer have to cruise up and down a river or around a lake “which was required before and was why they had the lower rate.” And most of the former “riverboat casinos” are land-based, according to Albrecht.
Gronstal is from Council Bluffs, home to a three state-licensed casinos, and he doesn’t expect Branstad’s plan to hike the casino tax to 36 percent to pass the legislature.
“Think about the differential impact of that. It takes $65 million out of Council Bluffs — $65 million. One third of those revenues come from our community and uses it to spread tax benefits to a whole bunch of businesses in eastern Iowa,” Gronstal says. “And I would also say not one of us ran on raising taxes.”
Gronstal made his comments during this morning’s taping of Iowa Public Television’s “Iowa Press” program. Branstad’s call for raising the state tax on casinos is directly connected to his request to reduce the state income tax on corporations, as the casino tax hike would raise about two-hundred million and the the corporate tax cut equals about two-hundred million dollars. After the show’s taping, Gronstal told reporters that’s a tax break for big business.
“Read his words: a flat rate of six percent,” Gronstal said. “He rewards only companies that are making more than $25 million a year.”
According to Gronstal, small corporations with profits of less than $25 million are already paying the six percent rate, so those small businesses won’t get a tax break.
Gronstal also warns a debate in the legislature about raising the casino tax will prompt some legislators to try to insert other gambling-related proposals in the bill.
In 1983 — during Branstad’s first year as governor — Branstad signed a law allowing betting at race tracks. In 1989, Branstad signed a law allowing casino-style gambling on riverboats. In 2007, Governor Culver signed a law which got rid of the requirement that the casinos float. Iowa now has 17 state-licensed casinos. The 18th is under construction in northwest Iowa, near Larchwood.
