Casino expansion puts lawmakers between tribes, labor groups 4-10-07

SACRAMENTO, California (AP) - State lawmakers opened debate on bills that would launch a massive expansion of casino gambling in California, questioning whether the deals would prove as lucrative to the state as Gov. Arnold Schwarzenegger has promised.

Schwarzenegger has struck deals with the state's most influential Indian tribes, allowing them to install about 22,500 additional slot machines in exchange for the state collecting more than $500 million in casino winnings annually. That revenue is crucial for Schwarzenegger to deliver on his promise to wipe out the state's chronic budget deficit this year.

Unions are among the most vocal critics and used their ties to Democratic lawmakers to block the compacts last year. On Tuesday, labor leaders said the agreements fail to protect workers' rights and provide few guarantees that the tribes would pay up to the state.

Some of the 50 union members at the hearing testified about how they had been discriminated against by Indian casino bosses.

``Show me one positive public policy benefit from these compacts,'' said Jack Gribbon, California political director for Unite Here, a casino and hotel workers' union. ``Tens of thousands of workers will go with no protections, despite the massive profits of the Indian casino industry.''

Tuesday's hearing before the Senate Governmental Organization Committee foreshadowed a difficult road ahead for the tribal deals.

Casino expansion has set up a rare clash between two of California's most powerful interest groups: the state's tribes, which have donated more than $64 million to political causes since 2004; and labor, which remains a core financial supporter and election day organizer for members of the Legislature's Democratic majority.

Senate President Pro Tem Don Perata, DOakland, has expressed confidence about the compacts' chances in the Senate. But key Assembly Democrats say they remain troubled by provisions the unions say are antiworker.

After the hearing, H.D. Palmer, spokesman for the governor's Department of Finance, urged lawmakers to focus on the fiscal importance of approving the casino deals.

``The longer these compacts are delayed, the tougher the choices are going to be,'' Palmer said, referring to the multibillion dollar shortfall that lawmakers must close before the new budget year begins in July.

Democratic members of the committee seemed intent on questioning the very revenue assumptions Schwarzenegger has promised from the deals.

''I'm trying to figure out exactly what the state gets here,'' said Sen. Dean Florez, DShafter, repeating the question often to tribal leaders during the nearly sevenhour hearing.

The compacts were rushed before the Legislature in the final days of the 2006 session in September. Since then, lawmakers have dissected the deals and found what Florez and others say are problems.

Some of the biggest gambling tribes, for example, will no longer be required to regularly open their books to independent auditors to make sure the state is getting its fair share of casino winnings.

The compacts would allow the Agua Caliente Band of Cahuilla Indians to more than double - from 2,000 to 5,000 - the number of slot machines and other games they operate at their casinos in Palm Springs and Rancho Mirage. They also would allow the Sycuan Band of the Kumeyaay Nation in San Diego to increase from 2,000 to 5,000 the number of machines the tribe operates.

The Morongo Band of Mission Indians near Palm Springs, the Pechanga Band of Luiseno Indians in Temecula and the San Manuel Band of Mission Indians in San Bernardino would be allowed to more than triple - to 7,500 - the number of slot machines they operate.

That's more than twice the number of slot machines in the largest casinos in Las Vegas.

Tribal gambling has become a $22 billionayear industry nationwide, one that is worth about $5.8 billion in California.

Elizabeth Hill, the state's nonpartisan legislative analyst, has warned that the governor's bet on revenue from new gambling compacts is unrealistic. Hill said it likely would take three to 10 years for the state to realize the revenue boost Schwarzenegger is counting on in a matter of months.

The governor's budget relies on Indian gambling revenue increasing from about $33 million this year to $508 million in the fiscal year beginning in July.

The governor's office said the increase is possible because tribes have assured the administration they could install thousands of new slot machines within months of approval and immediately begin paying the state a portion of the winnings.

Hill said the state could reap $200 million next year, at best. She also warned that the compacts could leave California on the hook for millions in unexpected costs.

"For example, they would require the state to spend millions of the projected revenue to help poor tribes that don't operate casinos, she said. The compacts also would let the richest tribes stop paying into funds for workers' compensation, gambling addiction and other costly programs, the analyst said.