Posted on 11/21/2004 11:52:02 AM PST by calcowgirl
Nearly six months after Gov. Arnold Schwarzenegger announced five new deals with gambling tribes to share more of their revenue with the state, California still has little of that money to show for it.
The governor said in June that the renegotiated agreements, or compacts, would give the state $1 billion for transportation this year, plus an estimated $150 million to $200 million each year and $2 million more for poor and non-gambling tribes in the state.
Thus far, the state does not have the $1 billion and is estimated to receive about $10 million in slot fees.
The money is slow in coming, but state officials say it is neither the tribes' nor the state's fault. That's because the agreements went into effect just two months ago after they were ratified by the state Legislature and the U.S. Department of Interior.
"These compacts that the governor signed in June have only been in effect since Sept. 2, when they were published in the Federal Register," said Anna Carr, a spokeswoman for the California Gambling Control Commission, which regulates American Indian casinos in the state.
Schwarzenegger was elected ---- after his predecessor, Gray Davis, was recalled ---- largely on the promise that he would get tribes to "pay their fair share" to help the state pull out of its budgetary problems.
Thus far, the governor has negotiated 10 deals with tribes around the state to share more of their money. He signed five in June with the Pala, Pauma and Viejas bands in San Diego County and the Rumsey and United Auburn bands in Northern California.
In those agreements, tribes promised to help pay for a bond that would provide the state with about $1 billion for transportation projects. They would also pay quarterly fees for slot machine licenses and $2 million annually each for other tribes without casinos.
Moreover, the new deals provided greater patron, employee and environmental protections.
In exchange, tribes are allowed to exceed the 2,000 slot machine cap that was implemented under their original compacts with Davis. Experts estimate that slots provide as much as 80 percent of the revenues for Indian casinos.
The reason the state has not received the $1 billion is that the bond that was supposed to provide it has not been issued. That in turn is because of legal uncertainties, according to officials in the state treasurer's office.
In order to secure the bond, tribes were guaranteed that they would keep their monopoly in slot machines. The governor was able to keep this promise by defeating Proposition 70, which would have allowed racetracks and card clubs to operate 30,000 of the machines.
Now, the bond is being held up by a lawsuit filed on behalf of the racetracks and card clubs that questions whether the Legislature's approval of the compacts was legal, state Treasurer Phil Angelides told reporters last month.
The state is also unlikely to collect the estimated $150 million to $200 million this year. That money is based on fees that would be collected from the licensing of slot machines, but the five tribes have ordered only about 1,200 slot machines.
Most don't have the room to put in many more machines.
Pala, for example, operates a casino about 15 miles north of Escondido. But it already operates 2,000 tightly packed slot machines at its casinos.
Pala Chairman Robert Smith said after signing the compact that his tribe would have to wait for an expansion of the casino before putting many more slots into play. He said Pala would add a few hundred to "test the market" first.
About six miles east of Pala's casino, the Pauma band in Pauma Valley is waiting to build a larger casino before it adds more slot machines to its gambling floor.
Pauma partnered with Las Vegas giant Caesars Entertainment Inc., to build a larger resort and casino under the Caesars brand name. But the gambling giant is in talks with rival Harrah's Entertainment Inc., to merge the two companies.
Because Harrah's already manages a casino in North County at the Rincon Indian reservation, the Pauma band has said that in the meantime, it was shopping for a new partner and was shelving its larger casino projects.
Still, Cheryl Schmit, director of Stand Up for California, a gambling watchdog group, said she believes the Schwarzenegger agreements will ultimately deliver the what was promised to the state. "It's just a matter of time," Schmit said.
Schwarzenegger signed five additional compacts with other tribes in the state. Those agreements are estimated to generate up to $200 million for the state. But those tribes do not have casinos, either.
One of the August agreements was supposed to create one of the largest casinos in the state with up to 5,000 slot machines in the Bay Area city of San Pablo. But that agreement has yet to be ratified by the Legislature because of questions about its controversial location in an urban center.
Schmit, who supports the governor's deals, said the tribes will deliver the revenue when their projects are completed. "Those compacts will bring in the money as the tribes build those casinos," she said.
It looks like all those revenues to fund Transportation projects won't be coming in soon.
Cool aide, where is my cool aide?
Did you see this one?
CA: The Sacramento mansion (entertaining "world leaders")
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