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Story ran on October 27, 1998

Education funds dry up without ‘boats in moats’


The issue of gaming continuing on "boats in moats" will appear on next Tuesday’s ballot. Many Missouri voters who will cast their ballots on that date are unclear on the relationship between gaming and Missouri education funding.

The Missouri Constitution is very clear that gaming revenues must go to education. Article III, Section 39 (d) of the Missouri Constitution states that all gaming revenues appropriated beginning July 1, 1993, must go to elementary, secondary and higher education.

Since gaming began in Missouri in May 1994, the 18 percent tax collected by the state on adjusted gross receipts of gaming operations has been earmarked for education and only education. In 1995, Senate Bill 301 was introduced and passed in the Missouri General Assembly. Senate Bill 301 further defined the priority of gaming revenues for education. Under the provisions of the bill, up to the first $7 million of gaming tax revenues each year may be appropriated to the School District Bond Fund. This money is used by school districts that have voter-approved general obligation bond issues to pay for the cost of issuing the bonds and to improve their bond ratings.

After the first $7 million, the remaining annual gaming tax revenues go entirely to help fund the school foundation formula. This earmarking of gaming funds for the School District Bond Fund and for the school foundation formula began on July 1, 1996.

The school foundation formula is the basic state aid program that helps local schools. The school foundation formula in large part helps to pay teachers salaries and also helps to pay the operating costs of school districts.

Larger-than-anticipated tax revenues from riverboat gaming have been a significant contributor to fully funding the new school foundation formula adopted in 1993. In fiscal 1998, the gaming industry, through the 18 percent tax collected by the state, generated $137 million to the foundation formula and $7 million to the School District Bond Fund.

Gaming has also provided positive economic benefits for Missouri. In April of 1998, an independent economic impact study was conducted and published by Charles Leven and Don Phares. Both men are highly regarded St. Louis economic professors. Leven is a professor emeritus of economics at Washington University, and Phares is a professor of economics and public policy at the University of Missouri-St. Louis and director of the North American Institute for Comparative Urban Studies.

Leven and Phares concluded in their study, "In 1997, the casino gaming industry in Missouri directly and indirectly generated more than three-quarters of a billion dollars of new spending in the state’s economy. Because of casino gaming, personal income grew by over $500 million. State and local governments received over $225 million in new tax revenues. Almost 18,000 new jobs were added to the economy. For almost any other industry, these statistics would be hailed without question an economic bonanza."

Given the positive impact that gaming has had on education funding in Missouri, it is important to ask what will happen if Amendment 9 does not pass. The answer is that the affected facilities will go out of business. Up to $92 million currently devoted to the school foundation formula will be lost.

In order to replace this lost revenue, the state of Missouri will have two options:

Neither of these alternatives is very attractive.

The passage of Amendment 9 will leave these important funds for education in place. It will also fairly allow these facilities that received all necessary state and local approvals prior to beginning construction to remain in operation.

James Moody, former Missouri director of revenue and a paid lobbyist for the gaming industry, is working to pass Amendment 9.

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