Gambling News by Gambling Headquarters

Gov. Arnold Schwarzenegger's bet that the state could balance its budget next year with revenue from bigger Indian casinos is unrealistic, a report released Friday by the state's nonpartisan Legislative Analyst said. Schwarzenegger's proposal to let tribes install some 22,500 new slot machines and then collect more than $500 million in new fees and taxes from them is critical to his plan to wipe out the state's chronic budget deficit next year. Legislative Analyst Elizabeth Hill, who in recent weeks has blasted the governor's spending plan for relying on rosy revenue projections, on Friday took aim at its Indian gambling component, saying it would likely take three to 10 years for the state to realize the revenue boost Schwarzenegger is counting on in a matter of months. "The governor's budget assumes that annual general fund revenues related to tribal-state compacts grow from $33 million in 2006-07 to $539 million in 2007-08," Hill wrote. "This projection is not realistic." What's more, according to her report, the compacts could leave California on the hook for millions in unexpected costs. The compacts would require the state to spend millions of the projected revenue increase in coming years to help poor tribes that don't operate casinos - money Schwarzenegger is relying on for the budget. The compacts also would let the richest tribes stop paying into funds for gambling addiction and other programs, the analyst said. "The Legislature could face funding shortfalls for gambling addition, regulatory, and local government programs," she wrote. H.D. Palmer, spokesman for the governor's finance department, downplayed Hill's concerns and said the administration sticks by its projections. "We're confident given the number and timing of the devices we've assumed in these agreements that we have the right dollar amounts," Palmer said. "These tribes are ready to immediately put the machines in place that form the basis of our revenue projections." Another large hurdle for the governor's Indian gambling plan is the Democratic-controlled state Legislature. The Assembly in September squashed the pending compacts, which Schwarzenegger has already signed, over concerns they would weaken the power of casino workers to unionize. The deals still face heated opposition from unions, card clubs, the horse racing industry and the antigambling lobby. Democratic leaders also have said they would need substantial changes before they win approval.