New York Gov. Andrew Cuomo
Not far from Baltimore’s Inner Harbor, 15,000 people came to the opening of Caesars Entertainment Corp.’s casino on Aug. 26 to be treated to fireworks, champagne and shows by Iggy Azalea and Gladys Knight.
Over the next week, Caesars raked in USD5.7 million from the unlucky or unsophisticated. More than one-third of the casino’s winnings went to Maryland’s tax collector, which has the windfall earmarked for public schools.
America’s state and local governments are addicted to gambling. Casinos alone were the source of $8.6 billion in taxes in 2012, according to the American Gaming Association. Growing hunger has encouraged banks of slot machines to sprout around the eastern U.S., eating away at the regional monopoly once held by now-struggling Atlantic City, New Jersey.
Next up: The Empire State. Starting yesterday, New York is holding three days of hearings on applications for many as four licenses to build Las Vegas-style casinos in the Albany area, the Catskills and Hudson Valley, and near the Pennsylvania border.
Governor Andrew Cuomo is betting (figuratively) that they could add $430 million to state and local government taxes and bring jobs to economically struggling areas. Weighing against that is the risk that the casinos could crash in the face of increasing competition from Maryland, Massachusetts and other nearby states.
New York need look only to Atlantic City, where four casinos have closed this year. Among them was Caesar’s Showboat. It shut less than a week after the company’s grand opening in Baltimore. Maybe that’s why Paul D, the MTV reality star, was on hand in Charm City, performing as a DJ for revelers, instead of back on the Jersey Shore.
In the six years since investment bank Lehman Brothers Holdings Inc. filed for the largest bankruptcy in history, triggering a worldwide market meltdown, state and city pension plans have been slowly on the mend.
As the Standard & Poor’s 500 Index headed toward record highs, the shortfall in public retirement systems eased to $1.26 trillion at the end of June, according to data released by the Federal Reserve last week. In 2011, it was $388 billion higher.
On Sept. 25, the Census Bureau will release a snapshot of the performance at 100 of the largest U.S. pension funds.
Why does it matter? To make up for lost ground, more taxpayer money – and, for public employees, larger chunks of their paychecks – have been set aside for pensions. Across the country, worker benefits have been scaled back, too. The gap between assets and obligations has driven credit rating cuts to bonds sold by borrowers including Illinois and New Jersey.
Today, the Census will release its tally of tax collections. The second-quarter figures may look grim: The Nelson A. Rockefeller Institute of Government in Albany estimates that income taxes plunged 7 percent from a year earlier.
The backstory is that the figures are down because governments got a windfall a year earlier, after savvy taxpayers moved income into the 2012 tax year to avoid federal rate increases.
California was once likened to Greece because of its chaotic politics and chronic budget deficits. Not any more. The state’s now projecting a surplus. And its credit rating from Moody’s Investors Service is the highest since 2001, before the full brunt of the Internet bubble’s demise.
The state is the biggest borrower in the municipal market this week. Today it’s scheduled to complete a $2.3 billion sale of debt to raise money for infrastructure.
Municipalities are set to sell about $8.1 billion of long-term debt this week, up from $6.8 billion last week, according to Bloomberg data.
What’s the matter with Kansas?
That was the title of Thomas Frank’s 2004 book, examining how a one-time hotbed of prairie populism is now dominated by the Republican Party.
That may not be assured for long. After tax cuts led to a budget shortfall this year and the state’s credit rating was lowered, more than 100 current and former Republican officials revolted against Governor Sam Brownback and endorsed his Democratic challenger in the November election. The race is now a toss-up, according to the Cook Political Report.
Another incumbent Kansas Republican, U.S. Senator Pat Roberts, is trailing independent businessman Greg Orman, a recent poll found. And Republican Secretary of State Kris Kobach, who last week lost a court fight after he refused to let a Democrat withdraw from the senate race, is facing his own tough battle for re-
election, as Bloomberg reported yesterday. William Selway, Bloomberg
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