Budget Woes Offer Hope to Proposition 68 Supporters

It was a bad week for California Gov. Arnold Schwarzenegger, who found himself stumping for voter support for his overdue 2004-05 budget plan at Mary's Pizza Shack in rural Dixon, along Interstate 80 west of Sacramento.

Schwarzenegger, who pledged that he would cut the waste in state government and deliver a balanced budget on time, is trying to sell the legislature on a spending plan that probably will amount to $81 billion, or about 7% more than last year. It now appears his much publicized new deals with five Indian gaming tribes won't come close to generating the first-year total of $300 million the governor has in his budget projections.

The news can only embolden the backers of the Proposition 68 initiative effort that will either force the tribes to fork over 25% of their gaming revenue or allow slot machines to expand to 11 card rooms and five racetracks in the state.

Assemblyman Jerome Horton, after chairing a hearing on the compacts negotiated by Schwarzenegger and recently approved by the legislature, said representatives of the tribes have far more modest plans for expansion than the budget projection suggests.

"Everyone knows it's not going to happen, but in the budget, we scored $300 million," Horton told The San Francisco Chronicle recently.

Under the compacts, the state would receive income by assessing a sliding licensing fee for slot machines at each of the casinos that exceed the old cap of 2,000 machines. Based on the plans put forth by the five tribes operating under the new agreement, Horton estimated the first-year figure at $56 million.

"It's not much, is it?" said Greg Larsen, spokesman for Proposition 68, known as the Gaming Revenue Act of 2004. He guessed that eventually tribes as a group would pay 5% to 6% of their gambling revenue to the state. By contrast, 30% of the revenue generated under Proposition 68 would go to various county and local agencies, including child services and education, law enforcement, and firefighters.

"We think that candidate Schwarzenegger had it right," Larsen said in reference to campaign statements made last year. "Twenty-five percent is the correct share."

Schwarzenegger officially became an opponent of Proposition 68 the week of July 5 with the release of the state ballot argument opposing the measure. He has also formed a campaign committee--"Governor Schwarzenegger's Committee for Fair Share Gaming Agreements"--to fight it.

"It's a sweetheart deal for the gambling interests behind it, another broken promise to Indian tribes, and a bad deal for the rest of us," Schwarzenegger's argument reads.

A spokesman for the committee, Todd Harris, said protecting the new compacts is vital. If voters were to approve Proposition 68, those deals would be nullified, he said.

"Obviously, that's a huge part of it," Harris said. "Gov. Schwarzenegger has worked very hard so that these negotiations would be concluded in such a way that we a have a fair deal for the tribes and a fair deal for the California taxpayers."

Thirty-four county sheriffs have teamed up with the anti-68 forces as well, an interesting development inasmuch as 35% of the city/county slots revenue under the initiative would go to the hiring of local sheriff and police personnel. Harris said "casinos can be a magnet for crime."

"I can't even begin to explain why they would stand in opposition to a measure that in a time of severe budget-cutting at the local level, would provide a steady stream of revenue they can use to hire officers," Larsen said.

Among Proposition 68's leading backers are Sacramento County Sheriff Lou Blanas and Los Angeles County Sheriff Lee Baca.

Schwarzenegger's compacts with the Indians will be allowed to go forward after a United States District Court judge July 7 turned down a temporary restraining order sought by Rincon Band of Luiseno Mission Indians. The San Diego County tribe challenges the governor's authority to create new compacts. 

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