Hughes: Legal gambling revenue untapped
McCOOK, Neb. — There’s a source of revenue worth millions of dollars for the State of Nebraska, but a source that will probably never be tapped: legalized gambling.
It’s big business in Iowa and many Nebraskans cross state lines to gamble, with Nebraska left to pay the consequences of problem gamblers, State Sen. Dan Hughes said Thursday morning at the McCook Chamber of Commerce conference call.
In response to a question as to why Nebraska hasn’t used this source, Hughes said he’s always been in favor of legalized gambling and it’s frustrating to see Nebraska lose “tens of millions, if not hundreds of millions, in tax revenue.”
That’s not going to change soon, he predicted, with the anti-gambling group, Gambling with the Good Life, successfully blocking any attempt to legalized it.
Although he understands the groups’ moral stance, Hughes said there are other areas where people are addicted or have problems with, such as alcohol, that are not regulated by the state.
“These are moral decisions people make for themselves,” he said. Many see gambling as entertainment, he said, but the anti-gambling group is “holding a big enough stick to stop it.” That stick could be revered former Husker football coach, Tom Osborne, who is spokesman for the group.
Hughes said the repercussions of addictive gambling, such as job loss and neglect of family, impact the state negatively and financially.
Yet those people will continue to gamble whether it’s legal or not and the revenue realized with legalized gambling outweigh those costs.
Revenue will be the hot topic next week in the legislature, with floor debate beginning on the budget. It will include the modified LB 289 from the Revenue Committee, that proposes directing new sales tax revenue to the state’s public schools as a way to reduce property taxes.
The bill helps level the playing field and re-balance the formula now used to allocate state aid to schools, Hughes said, although it doesn’t address the root cause of the problem: the flawed formula to begin with.
The current way the state funds public school districts is through the TEEOSA formula (“Tax Equity and Educational Opportunities Support Act”), that calculates the needs of the school district (including the number of poverty students, children speaking English as a second language and student population), minus the resources available to the school district (including property taxes), that yields the amount the state will fund. Rural school districts get the lion’s share of funding from property taxes on agricultural land, eliminating or lessening the need for state funding, while urban school districts get more state aid.
The disparity between rural and urban school district funding has revealed talk from some who believe there should a reduction of high schools in “out-state Nebraska,” areas outside of Lincoln and Omaha, Hughes said.
In conversations he’s heard, Hughes said some believe high schools in rural areas should be online only, or have one “hub” high school serving several districts.
LB 289 proposes reducing property valuations used for K-12 education by 10 percent, with residential and commercial properties valuated at 90 % and ag land from 75 to 65 %.
About $372 million in new tax revenue would be raised by increasing the state sales tax rate by 1/2 cent to 6 percent — tweaked from the 3/4 cent increase first proposed — and repeal sales tax exemption on several services, such as storage, moving, plumbing, HVAC and certain veterinary services. New taxes would be levied on bottled water, candy and soft drinks. Taxes on cigarettes would also be bumped up from 64 cents per package to $1. Other services under the bill that would be removed from sales tax exemption are pet-related services, moving services, storage, hair care and hair removal services, nail care, skin care, tattoo, home services and repair (including plumbing, HVAC and electrical), interior design, taxi, limo, ride-share, lawn care, parking, swimming pool cleaning, dating services, wedding planning, weight loss, personal training, clothing alteration, and car repair.
The bill also guarantees that 25 percent of education costs for each school district would be funded by the state, Hughes said.
If the legislature can’t find significant property tax relief, perhaps those outside of it can. A group called True Nebraskans staged a rally this week on the steps of the state capitol — one of many rallies staged each week by different groups, Hughes said — announcing their petition drive for a property tax relief initiative for the 2020 ballot.
The initiative calls for a 35% refund on property taxes. Asked about the rally, Hughes said if put to the voters, the initiative would probably pass, as in past initiative drives, such as Medicaid expansion.
“The question is, how do we pay for it?” He said. The legislature would have to find the money somehow, he said, and that could come in fixing the TEEOSA formula that determines state aid to schools.
But, if the formula is working to someone’s advantage, such as in urban school districts, there isn’t much incentive to change it, Hughes said.