By Thomas Beckett, NMA Arkansas Member
Editor’s Note: In 2020, for the Driving in America blog, Thomas has already written three posts on how a small state like Arkansas is working to fund infrastructure projects. His last post is about raising speed limits in the state. Check out all four below.
- Driving in America—Arkansas Report Part 1
- Nothing as Permanent as a Temporary Solution—Driving in America: Arkansas Report Part 2
- Motorists Vote 2020: Arkansas Ballot Issue 1
- Hammer Down! Highway Speed Limits Increase in Arkansas
This particular piece does not have much in it regarding highway funding, but it is necessary for background on how we got to where we are now.
In addition to raising the fuel tax in 2019, the state legislature passed Act 416, which would allow for tax revenue from planned casinos to be used for transportation. But how did this happen?
In 2018, Ballot Question 4 was an Amendment to allow casino gambling in Arkansas. It passed with 54 percent of the vote in that election, becoming Amendment 100. The measure allowed casino gambling in four counties: Crittenden, Garland, Pope, and Jefferson. Two of the counties (Crittenden, home to West Memphis, and Garland, home to Hot Springs) already had gambling venues, which would be automatically granted licenses to operate a casino at their respective locations.
In Crittenden County, the Southland Racing Corporation, which operates a dog track, would get a license, and in Garland County, the license would go to the Oaklawn Jockey Club, which operates a horse racing track there. The Pope County license would go to a new operation, to be within two miles of Russellville; the license in Jefferson County would go to a new casino to be built within two miles of Pine Bluff. The Pine Bluff and Russellville applicants would be required to provide letters of support from the county judge, or the Quorum Court (a group of judges who act as a kind of county legislature); and also from the mayor of each city, if the casino was to be located within city limits.
When Ballot Question 4 was initially conceived, none of the revenue from the casinos was to be used for any highway purpose, though there was discussion of this possibility. Here is how the measure appeared on the ballot:
Under the measure, for each fiscal year, casinos are subject to a tax rate of 13 percent on the first $150,000,000 of net casino gaming receipts and a rate of 20 percent on net casino gaming receipts exceeding $150,000,001. Net casino gaming receipts were defined in the measure as “casino gaming receipts less amounts paid out or reserved as winnings to casino patrons.” Under the measure, no other taxes can be imposed on casinos. Tax revenue from casinos was designed to be distributed as follows:
- 55 percent to the State of Arkansas General Revenue Fund;
- 5 percent to the city the casino is located in unless the casino is not located in a city, in which case it will be distributed to the county the casino is located in;
- 5 percent to the Arkansas Racing Commission for deposit into the Arkansas Racing Commission Purse and Awards Fund to be used only for purses for live horse racing and greyhound racing by Oaklawn and Southland; and
- 8 percent to the county the casino is located in.
The measure also legalized wagering on sporting events.
One of the groups in favor of the amendment was called Driving Arkansas Forward. Its TV ads implied that proceeds from the casino tax would be used for highway funding. This was deceptive, since the amendment as proposed, had no such provision, and was silent on that issue.
During the run-up to the 2018 election, the Arkansas Department of Transportation finally weighed in, stating categorically that the amendment, as written, did not provide for any highway funding:
Arkansas Highway Commission spokeswoman Britni Padilla-Dumas said, “Specifically, citizens need to understand that the proposal does not direct any of the revenue to be generated from the casinos to our state’s highways, despite what some of the promotional ads are implying. The fact is, the proposed constitutional amendment regarding casino gambling is not a highway funding proposal.”
Not surprisingly, support for the amendment came from several of the Oklahoma casino operators, all of them connected to Native groups that ran casinos there, where tribes have been running them for years.
The Downstream Development Authority of the Quapaw Tribe, which operates Downstream Casino just over the state line from Joplin MO, in the far northeastern most corner of Oklahoma, contributed $3.6 million in support; Cherokee Nation Businesses, which operates ten casinos in their territory, chipped in $2.2 million. Both tribes applied to be operators of the Russellville and Pine Bluff casinos.
As for Pope County—well, therein lies a tale. The voters in Pope County rejected the measure. Still, then the sitting-and outgoing-County Judge and mayor of Russellville both sent letters to the Racing Commission in favor of the project. The residents of Pope County cried foul, and litigation started almost immediately and is ongoing.
Part 2: Next time: Send lawyers—the litigation begins.