One-armed ban­dits and a sure thing

Austin American-Statesman - - OPINION -

The pro­jected $11 bil­lion to $18 bil­lion gap be­tween what Texas tax col­lec­tors take in and what Texas leg­is­la­tors will vote to spend breeds a lot of rev­enue rais­ing schemes.

You’ve heard some and will no doubt hear some more be­tween now and the end of the 2011 ses­sion. Those pitch­ing the schemes will toss so many num­bers, re­ports and pro­jec­tions your way that you will un­der­stand why Pres­i­dent Harry Tru­man longed for a one-handed econ­o­mist.

“All my econ­o­mists say, ‘On the one hand … and on the other hand ...’ Some­one give me a one-handed econ­o­mist!” Tru­man cried.

We got a brief glimpse of the fu­ture last week dur­ing a com­mit­tee hear­ing on the po­ten­tial im­pact of gam­bling on state rev­enue. Whether gam­bling is fis­cal sal­va­tion is a mat­ter of con­jec­ture. Grow­ing fi­nan­cial pres­sure on school dis­tricts is real. To pro­mote a fan­tasy that the Leg­is­la­ture isn’t rais­ing taxes, they’ve pushed more costs onto lo­cal school dis­tricts.

And there still isn’t enough money to cover state ex­pen­di­tures, so gam­bling gets an­other look while school dis­tricts strug­gle along a va­ri­ety of fronts — in­clud­ing keep­ing kids in school. Pro­po­nents of le­gal­iz­ing casino gam­bling in Texas dan­gle re­ports promis­ing up to $4.5 bil­lion in ad­di­tional an­nual rev­enue.

Ex­pe­ri­ence dic­tates that leg­is­la­tor and cit­i­zen alike should be skep­ti­cal of prom­ises of easy money and jobs. Parimutuel pro­po­nents’ prom­ises of big bucks never ma­te­ri­al­ized.

Like ev­ery busi­ness, the gam­bling busi­ness takes a hit in a re­ces­sion­ary econ­omy. Ne­vada, birthplace of mod­ern casino gam­bling, was see­ing steady de­clines in gam­bling rev­enue long be­fore the cur­rent re­ces­sion hit.

But let’s just say for the sake of ar­gu­ment that the cur­rent crop of gam­bling pro­mot­ers de­liv­ered ev­ery dol­lar they prom­ise. Don’t hold your breath wait­ing on the cash, John Hele­man, the state’s rev­enue es­ti­ma­tor, told the House Li­cens­ing & Ad­min­is­tra­tive Pro­ce­dures Com­mit­tee last week. It might be years be­fore col­lec­tors see any money from ex­panded gam­bling. Any­one who has been around state govern­ment longer than 15 min­utes knows he’s right.

Ex­pand­ing le­gal­ized gam­bling in Texas re­quires ap­proval by 121 leg­is­la­tors. As­sum­ing pro­po­nents could round up 121 votes in a re­dis­trict­ing ses­sion — usu­ally marked by hy­per­ven­ti­lat­ing par­ti­san­ship — vot­ers wouldn’t get a shot at it un­til Novem­ber. Then, of course, per­mit­ting pro­ce­dures and rules gov­ern­ing the op­er­a­tion of ex­panded gam­bling would have to be es­tab­lished. Any bets on how fast the bu­reau­cracy will move dur­ing the hol­i­day sea­son?

On the other hand, com­mit­tee Chair­man Ed­mund Kuem­pel, R-Seguin, noted, “What I read shows 2013 won’t be a heck of a lot bet­ter than 2011. It might be a good idea to get started (now).”

So maybe gam­bling will de­liver money some­time. Prob­lem is, we need the money now.

The Al­liance for Ex­cel­lent Ed­u­ca­tion is­sued a re­port in April that took an­other look at the eco­nomic im­pact of school dropouts. Usu­ally re­ports of this sort talk about how much dropouts cost. This one pro­jected how much those young­sters could have con­trib­uted had they not dropped out.

Had the mi­nor­ity dropout rate of the class of 2008 been cut in half in Texas, 2,800 jobs would have been cre­ated and $477 mil­lion would have been pumped into lo­cal economies when those stu­dents reached mid­ca­reer.

Keep­ing a Cen­tral Texas stu­dent from drop­ping out would have in­creased his or her spend­ing power enough to cre­ate 200 jobs and boosted the gross re­gional prod­uct by as much $33.1 mil­lion. In­creased wages and higher spend­ing would have gen­er­ated an es­ti­mated $2.2 mil­lion in state and lo­cal taxes by the time the young­sters reach mid­ca­reer.

Take those num­bers with as much salt as you need, but dropouts soak up pub­lic money. Texas A&M re­searchers es­ti­mate that the Texas class of 2012 is on track for a dropout rate of 12 to 22 per­cent. Those dropouts will cost the state $9.6 bil­lion over their life­times. Gam­bling may pay off, but fully ed­u­cat­ing chil­dren is a sure thing.

It is highly un­likely that the Leg­is­la­ture will do much with school fi­nance next ses­sion, but an es­ti­mated 40 per­cent of the state’s school dis­tricts are dip­ping into re­serve funds.

“I don’t think school dis­tricts in Texas will ever get all the money they need,” State Rep. Scott Hochberg. D-Hous­ton, told the Hous­ton Chron­i­cle re­cently. “I’m par­tic­u­larly concerned that we are still un­der­fund­ing what it takes for a school district to be suc­cess­ful with the most chal­leng­ing kids,” he said.

Bet­ting that school fund­ing prob­lems will some­how fix them­selves gets you long odds.

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