Column: A tax is still a tax
ST. PAUL -- In a recent newsletter from a state lawmaker, there was a declaration opposing the use of state general fund money for a Vikings stadium. However, the lawmaker went on to assume that state tax revenue from gambling activities such as electronic pull tabs and racino (slot machines at Minnesota's two horse tracks) would not be considered general fund dollars and therefore an acceptable source of revenue to fund a new stadium.
This interpretation of state tax revenue from gambling activities has been well orchestrated and sold to legislators over the years in order to create the illusion that their vote to fund a new Vikings stadium with new revenue from the expansion of gambling has no affect on the general state budget.
But once you put the rhetoric aside and look at the lack of rationale to back up the statement, it becomes clear this argument that "new tax revenue from gambling is not general fund dollars" is not derived from valid reasoning. It is no different than declaring "It's not a tax because I said it's not a tax." All state revenue from personal income taxes, sales taxes and corporate franchise taxes are deposited into the general fund. The only tax revenues that are not considered general fund revenue are those that are defined by state statute or constitutionally dedicated.
An example of a constitutional dedication of tax revenue is the funds derived from the gas tax or state lottery dollars. As for statutory dedication, these are funds from fish licenses or building permit revenues, which are pledged to be used only for a specific purpose. The legislature can always decide to change the use of the funds which are in statute by a majority vote and with the approval by the governor. Constitutional-dedicated funding can only be changed by the vote of the citizens.
So if legislators desire to fund a new Vikings stadium with state tax revenue from expanding gaming operations, the funds would be deposited into and withdrawn from the same pool of state money used for education, healthcare and public safety, also known as the general fund. Any additional funds from gambling could be used to fund schools, highways, public safety or hundreds of other state needs. To project that new revenues from gambling could or should only be used to fund a new Vikings stadium is grossly incorrect.
Therefore, any legislator that votes to fund a new Vikings stadium with additional revenue from gambling is taking the position that funding a new Vikings stadium is a higher priority than any other state budget item. Yes, that means lawmakers would be putting a Vikings stadium ahead of schools, nursing homes, public safety, human services, highways, etc., etc. Spending is spending, and building a new stadium for billionaire Zygi Wilf is spending state tax dollars regardless of the revenue source.
Some legislators want to claim that revenue from state operated or regulated gambling is not a tax. The definition of a tax is: "A charge imposed by an authority upon persons or property for a public service." The state imposing a charge on any gaming operations is a tax. In the case of racino, the proposed tax is 30 percent on gross receipts. This means the state would take 30 percent of every dollar put into a slot machine at Canterbury Downs in Shakopee and Running Aces in Columbus.
Thirty percent of every dollar wagered flowing into the state treasury is a tax. It's not a voluntary contribution. If the state requires you to pay it, it's a tax. Any state-operated or state-licensed gaming operation which is required to pay a percentage of their revenue to the state is a tax. In addition, any taxes on new gaming operations that currently aren't in state law would be a new tax.
It's time for legislators to take a step back, put the stadium issue aside for a moment and consider the result of state-sanctioned expansion of gaming and how it aligns with the principles they campaigned on. Does additional tax revenue from gambling contribute to or slow the growth of government? Does it align with the "not a penny more" stance many legislators stated last summer? Should state government live within its means?
The bottom line is that if legislators vote for racino, they are voting for a new tax -- a tax increase that legislators did not to impose during the regular session or the special session in order to close the budget gap.
If legislators were unwilling to raise taxes to fund higher education, healthcare and property tax relief, why are they now willing to raise taxes to fund a new Vikings stadium? Do they believe that Zygi Wilf's threat to move the Vikings has more political downside than the taxpayers' opposition to using state tax dollars to finance a new Vikings stadium? Only time will tell.
Phil Krinkie is a former Republican state representative from Lino Lakes and president of the Taxpayers League of Minnesota.