Gambling Deals Are Downsized
SACRAMENTO — Gov. Arnold Schwarzenegger, who struck deals with Indian tribes last year aimed at infusing state coffers with more than $1.3 billion, now concedes that the state will receive no more than $16 million this year.
Some Democrats on Tuesday accused the Republican governor of overstating the benefits of his gambling deals to win legislative approval of them and to help derail two November initiatives that would have expanded gambling without his participation.
They also cast doubt on whether the bulk of the money, most of it earmarked for transportation projects, would materialize anytime soon.
"We're gambling on gaming too much," said state Sen. Tom Torlakson (D-Antioch), who chairs the Transportation Committee. "Rolling the dice doesn't provide the certainty transportation planners need."
Schwarzenegger, relying on his negotiators' estimates about the benefits of the gambling deals, made his prediction after signing deals last June granting five Indian tribes the right to unlimited expansion of slot machines. He approved deals with four other tribes later in the year.
In exchange, the tribes agreed to help the state out of what was a $14-billion shortfall. Tribes with casinos would use their new financial clout to secure a $1-billion bond for state transportation projects and make annual payments to the state based on the number of slot machines they added to their casinos.
Administration officials, contending that tribes would add the highly profitable devices rapidly, predicted last summer that payments would amount to $300 million, plus the $1-billion bond in the current fiscal year.
The administration revised that projection in Schwarzenegger's new budget proposal, released on Monday. The reduction reflects Finance Director Tom Campbell's goal of presenting an honest budget, said Finance Department spokesman H.D. Palmer.
"Any assumptions in this budget are going to be conservative and defensible," Palmer said.
Finance Department analysts determined that the tribes were expanding their gambling operations more slowly than the administration had predicted. As a result, they concluded, the state stands to receive $16.3 million from slot machine expansion in the current fiscal year, and $34.3 million next year -- not the $300 million in the budget approved last summer.
