Many jurisdictions with gambling operations earmark tax revenues for certain functions. In Canada, governments devote some gambling revenues to private charities, and in the United States, a variety of activities are selected to be beneficiaries of revenues. Most of the thirty-nine lotteries (thirty-eight states plus the District of Columbia) earmark some funds to specific functions of government. Most of the funds are designated for educational activities; others send funds to senior citizen programs, parks and recreation programs, or public safety. Casino taxes are often earmarked as well. Special slot machine taxes in Nevada are designated for education, as are parts of the casino taxes in Illinois, Michigan, Mississippi, and Missouri. Colorado and South Dakota use casino taxes for tourism and historical preservation. Indiana uses casino taxes for economic development, Iowa for infrastructure and local governments, Missouri for public safety, and New Jersey for senior citizens and urban redevelopment.
Earmarking is not necessarily the most efficient way to distribute public funds. The process removes a certain amount of flexibility from legislators who may be trying to set priorities for the state on the basis of current needs. By designating a specific function to receive gambling taxes, however, proponents of casinos, lotteries, or other forms of gambling can win critical support from important groups in their campaigns for legalization. Proponents of the lottery in Georgia won such critical support by offering lottery money for college scholarships for all Georgia high school graduates who received B averages.
After a form of gambling operations begins, the objectives of the earmarking process are often difficult to maintain. If the functions supported by earmarking are old activities, legislators are prone to reduce previous funding of the activities from other taxes and merely replace the funding with gambling revenues. The activity receives the same funding as it did before. Also, when earmarking provisions are established, legislators seek to broaden definitions of the activities. As mentioned, Nevada uses special slot machine taxes to fund education. One year the state wished to build a basketball arena for the Running Rebel basketball team of the University of Nevada, Las Vegas, and the state was short of general fund monies for the project. With some minor redesign, the basketball facility ended up with some meeting rooms, which were sometimes scheduled to hold classes. Hence, the basketball arena became an educational facility.
|
|