One-armed bandits and a sure thing
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.