The tentative agreement Mayor Dave Bing brokered with many of Detroit's unions last Wednesday requires the city seek out new revenue sources in exchange for worker concessions. One of those provisions says the city should lobby the state to tax the casino winnings of non-Detroit residents.
After agreeing to significant concessions less than two years ago, city workers are looking to avoid future cuts to their pay and benefits. The union side of the new bargain with Bing would include health care and pension concessions and a 10 percent across-the-board wage cut, the Detroit News reports. Police and firefighters have yet to come on board with the concessions, and the city is waiting for their support before finalizing the agreement.
Proponents say a strengthened casino tax would allow the city to bring in revenue, rather than continue cutting to balance the budget.
Interpretations of city and state laws currently exempt non-residents' casino winnings from Detroit's city income tax, according to Fox 2 News. AFSCME attorney Richard Mack, who represents city workers, told the TV station the law should be changed so Detroit can "do some long-term structural things to bring in revenue."
Looking at all available options, including new revenue sources, is necessary to avoid a state takeover of Detroit. The city is currently under financial review, and new sources of revenue could persuade the review board to recommend against a state-appointed emergency manager.
State Rep. Rashida Tlaib (D-Detroit) believes an agreement between the city and its workers to seek out revenue could spark new life into a related bill she introduced last year that would increase the taxes Michigan cities can collect from casinos.
House Bill 4648 would not affect casino winners, but would raise the casino's business tax rate to 23 percent and would raise the city tax on casinos' gross receipts to 12.9 percent.
If the bill becomes law, Tlaib said the increased tax rate would raise about $28 million for the state -- funding K-12 education -- and $42 million for the city of Detroit. The bill is still in committee.
Tlaib introduced the bill last May with co-sponsors Harvey Santana (D-Detroit) and John Olumba (D-Detroit). She told The Huffington Post she is a firm supporter of Detroit's casinos, but she also expects them to pay their fair share.
"Just like I expect my neighbors to pay their taxes, I expect corporate neighbors to pay their taxes, too," she said. "I believe we need to say yes to Detroit and make this a true shared sacrifice."
This isn't the first time politicians have tried to raise taxes on Detroit gaming houses.
Mayor Bing unsuccessfully pushed for a casino tax increase in April of last year. He argued that gambling establishments in Michigan paid much lower taxes than other states, noting that Ohio had a 33 percent tax rate.
In 2004, Public Act 306 raised Detroit casino taxes by 6 percent with 2 percent of the new revenue going directly to the city.
While the city has struggled with its finances, Detroit's three casinos had a record year of profits in 2011. They earned a combined $1.42 billion in gross revenue, an improvement of 3.4 percent over 2010, according to Crain's Detroit Business.
The city took in $183 million in tax revenues from casino wagering in 2010, including a $9.6 million back settlement on taxes owed by Greektown Casino.