One month of slightly better-than-expected revenue collections does not an economic recovery make. And the new Business Conditions Index of the mid-America region released Tuesday warns that the economic recovery is subdued and fragile. Still, it was a relief that the state collected $6.9 million more in taxes than it estimated for August. July revenue was about $5 million below estimates, which means the state revenue is right on track so far this fiscal year — though delays in paying income-tax refunds in order to help cover last fiscal year’s shortfall mean that the state’s revenue this year is down by $29.3 million.
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8 Comments
Don’t worry … something will come along.
Get a new picture, please.
But, but, but the libs tell us we have recovered from the recession. What is happening here?
Anything for an early attack on your imaginary liberal nemeses, eh?
Many economic signs are indicating that the American economy is in a recovery phase and all Americans should be happy about that.
The money will start rolling in with the new Kansas State owned casinos:
Kan. to be unlikely casino owners Capitol Journal
BY JOHN HANNA
September 1, 2009 – 5:26am
In Kansas, Carrie Nation battled booze by smashing up saloons, the state school board once approved science guidelines questioning evolution and anti-abortion leaders have made their stiffest stands all burnishing the state’s conservative credentials.
Now, Kansas is poised for an unlikely distinction: It is about to get into the casino business, not merely by blessing gambling and taxing the profits but by becoming the legal owner of the casinos themselves.
Kansas is believed to be the only state with such an arrangement. It already has four Indian casinos, but its first nontribal one is set to open in December in Dodge City, the former cowtown and setting of television’s “Gunsmoke.”
It is all because the state, known for its conservative history and a vibrant right wing within its dominant Republican Party, needs the money.
Lawmakers in recent months have slashed money for schools and other state services, and the current state budget relies on $50 million in casino licensing fees to remain balanced.
“It’s terribly ironic, and disappointingly so. I never dreamed that Kansas would be the first to try this experiment,” said House Speaker Mike O’Neal, a Hutchinson Republican who fought unsuccessfully to block the 2007 law authorizing the new casinos and slot machines at racetracks.
Developers will build the casinos, install slot machines, set up tables and manage dealers, all under contract with the state lottery. They pay upfront privilege fees: $5.5 million for Dodge City and $25 million each for casinos planned in the Kansas City and Wichita areas.
The state will own the games and control software determining who wins and may overrule management decisions. Contracts spell out how revenues are divided.
“The whole ownership thing it always struck me as a little bit squirrely,” said Burdett Loomis, a University of Kansas political scientist. “You could imagine Louisiana owning the casinos, or New Jersey.” But Kansas?
Voters here imposed prohibition in 1880 and kept it for nearly 70 years, well after the federal government repealed it. Afterward, the state constitution continued to condemn the “open saloon.”
The state school board went back and forth on evolution during the past decade, rewriting science standards four times and making Kansas the target of international ridicule.
The state has been at the center of the national debate over abortion, too. George Tiller’s clinic in Wichita was among a few in the nation that performed late-term abortions, spurring protests and laws designed to restrict his practice until the doctor was shot to death May 31.
All of it would appear to make the turn toward gambling unlikely save for the state’s troubled finances.
The American Gaming Association says the United States already has 179 commercial and 420 tribal casinos outside Nevada, as well as 700 card rooms and 44 racetracks with slot machines.
So, industry officials and analysts say, why not more casinos in Kansas?
David Schwartz, director of the Center for Gaming Research at the University of Nevada-Las Vegas, notes other seemingly conservative states Iowa is a frequent example are awash in games of chance.
Also, as Loomis noted: “When revenue is a consideration, old-fashioned morality sometimes goes out the window.”
Twelve other states have nontribal casinos and a dozen have racetracks with slots. Several own machines at tracks, but the American Gaming Association says Kansas is the first with the arrangement for an entire casino.
Clark Stewart, chief executive officer of Butler National Corp., the Olathe company building the Dodge City casino, said the real issue is the 27 percent share of revenues for state and local governments. “We’re at the top end, percentage-wise, of what we can do,” he said.
The Kansas Constitution once banned any lottery a term courts interpreted broadly enough to cover slots and table games but resistance to gambling eroded over time. Constitutional amendments in 1986 made exceptions to the ban for the state lottery and betting on dog and horse races. Federal law allowed the Indian casinos to open in the 1990s, whetting some legislators’ appetite for commercial ones.
To get any constitutional change on the ballot for a vote, supporters need two-thirds majorities in the Legislature something social conservatives have blocked when it comes to commercial casinos.
But state ownership through the lottery didn’t require another constitutional change, only a new law approved with simple majorities in both chambers. In 2007, gambling supporters barely obtained the necessary margins.
The state hopes to choose developers for casinos for the Kansas City and Wichita areas before year’s end. The Dodge City casino plans to open with 575 slots and 10 tables, then expand within two years.
“I guess it doesn’t strike me as particularly odd,” said Senate Majority Leader Derek Schmidt, an Independence Republican who voted for the casino-and-slots law. “Every state has its own historical contours.”
Foxwoods Casino Owner Said to Seek Debt Restructuring
By Beth Jinks and Jonathan Keehner
Bloomberg.com
August 26, 2009
http://www.bloomberg.com/apps/news?pid=20601103&sid=aFW6lpAhuSqU#
Aug. 26 (Bloomberg) — Mashantucket Western Pequot Tribal Nation, owner of the Foxwoods Resort Casino, is seeking to restructure at least $1.45 billion in debt as winnings dwindle, according to a person with knowledge of the situation.
A restructuring plan has been submitted to creditors and the Connecticut casino’s owners have hired Miller Buckfire & Co., a New York investment bank, as an adviser, said the person, who declined to be identified because the talks aren’t public.
Foxwoods, one of the largest casinos in the U.S. by gambling space, may become the biggest tribal casino company to default. The operation has lost business to the recession and competition from new casinos and racetracks with slot machine- style video-lottery terminals in nearby states. Slot revenue fell 13 percent in July, the casino said on Aug. 14.
“They can’t do the types of things other debtors can in a restructure,” Megan Neuburger, an analyst at Fitch Ratings in New York, said today in an interview. “Tribal casinos can’t do a debt-for-equity swap. They can’t raise cash by selling off assets on tribal land” to repay creditors.
Lori Potter, a Foxwoods spokeswoman, didn’t respond to a call and e-mail seeking comment. The Day newspaper in New London, Connecticut, reported the restructuring efforts earlier.
Mashantucket has a $700 million revolver loan due in July 2010, $500 million in 8.5 percent bonds that mature in 2015 and $250 million of 5.912 percent bonds due in 2021, according to data compiled by Bloomberg. It may have other debts as well.
Unprecedented
Standard & Poor’s today cut its Mashantucket rating four steps to CCC and placed the debt on credit watch, citing the restructuring reports.
Creditors probably can’t take over assets or operations of casinos on tribal land, which are sovereign nations, as they may with commercial bankruptcies, Neuburger said on a conference call. That leaves them little choice other than to restructure debts and work with the tribe, Neuburger said. No tribal casino has tested bankruptcy laws.
“Bankruptcy law does not apply to tribal situations in the same way it does to a commercial situation,” Neuburger said.
Michael Thomas, chairman of the Mashantucket Pequot Tribal Council, told members that the tribal government would be paid first, before bankers or bondholders, The Day reported, citing an e-mail sent out last week.
The tribe has a payment due on its loan Sept. 1, said Lawrence Klatzkin, an analyst in New York at Chapdelaine Credit Partners, a unit of Chapdelaine & Co., a municipal bond broker.
Equity First
“It might be posturing, but the tribe is indicating that it might put itself, the equity holder, ahead of the debt, ignoring corporate law,” said Klatzkin. “It probably won’t happen, but if it does, who’s to say other tribes don’t say, ‘If Foxwoods doesn’t need to meet its U.S. legal obligations, maybe I don’t either.’”
Closely held Foxwoods, based in Ledyard, Connecticut, once competed only with Atlantic City for gamblers in the northeastern U.S. Today gamblers can also visit the Mohegan Sun casino, operated by the Mohegan Tribal Gaming Authority, 10 miles away in Uncasville, Connecticut, and slot casinos in Pennsylvania; Yonkers, New York; and Rhode Island.
Competition is expected to intensify when New York City’s Aqueduct Racetrack expands and adds slots, and if states including Massachusetts allow casino gambling.
Located on tribal land in the hills of southeastern Connecticut, Foxwoods has three hotels and six casinos with more than 7,200 slots and 380 table games. The Mashantucket Pequots, described as native Algonquins, receive income from the earnings.
Malaysian Investor
Malaysian investor Kien Huat initially helped finance Foxwoods, which opened a casino and hotel under the MGM Grand brand in May 2008.
Three smaller tribal gaming companies have missed loan obligations during the recession, Neuburger said. In New Mexico, Buffalo Thunder Resort & Casino and Inn of the Mountain Gods Resort & Casino, and in Michigan, Little Traverse Bay Band of Odawa Indians, have defaulted on bond payments.
Those crazy cons will just use it as an excuse for another bus. tax cut.
What’s happening here, is you can’t scrape up along the ice berg and not expect to have to deal with some severe damage. Repairs are under way.