Gulf Coast tax breaks exclude casinos, tracks

WASHINGTON – Before Hurricane Katrina, the Gulf Coast was well on its way to becoming a popular gambling destination. Now, for the gaming industry, a second storm – this one political – is brewing.

Katrina damaged and destroyed many of the casinos that had become an increasingly important sector of the region’s economy. On Capitol Hill, lawmakers are split over whether taxpayers should help rebuild gambling establishments, along with some other businesses objectionable to social conservatives.

The House on Wednesday approved legislation to provide an array of tax breaks aimed at spurring the Gulf Coast’s economic recovery – but would exclude casinos from these benefits. Massage parlors, liquor stores, hot tub facilities, country clubs, racetracks and suntan facilities also would be ineligible for the tax incentives.

The provision sets up a showdown with the Senate, which did not include similar restrictions in its post-Katrina tax relief package.

It also outraged some lawmakers, who argued the measure unfairly targets a legal industry that employed about 50,000 people in Louisiana and Mississippi and generated more than $770 million a year in tax revenues.

“Shame on this body for allowing the gaming industry to be discriminated against,” said Rep. Shelley Berkley, D-Nev.

A core of socially conservative Republicans in the House said it was politically indefensible to provide tax breaks to casinos and some of the other excluded businesses at a time of massive federal budget deficits and spending cuts.

“It would be very difficult, almost impossible, to go to a town meeting sometime and say that I, or the Congress, supported giving tax breaks to rebuild a casino, a massage parlor or a liquor store,” said Rep. Frank Wolf, R-Va.

Wolf also argued that gambling operators don’t need federal help to rebuild.

Beverly Martin, executive director of Mississippi Casino Operators Association, said that Congress was denying a benefit not to casinos, but to tens of thousands of workers whose jobs are tied to gaming.

“The casinos are the largest employer on the Mississippi Gulf Coast,” she said.

In an interview, Rep. Charlie Melancon, D-La., expressed chagrin about the controversial provision. “This thing of trying to impose personal beliefs into law, people are starting to getting carried away with it,” he said.

Still, Melancon voted for the measure because of the financial help it would give his region.

One big casino remains closed in New Orleans.

On the coast of Mississippi, 13 floating casinos have been shut down since Katrina struck in late August, although one is expected to reopen later this month and two others early next year.