AG Rutledge rejects casino-highway funding amendment proposal

Arkansas Attorney General Leslie Rutledge has rejected the language for a proposed constitutional amendment that would allow up to three casinos in restricted parts of the state with tax revenues steered toward highway funding.

Rutledge cited the definitions of “casino” and “casino gaming,” whether the measure is a true “highway funding” proposal, and a reference to the Arkansas Economic Development Commission as reasons for her rejection.

Three weeks ago, a citizens’ group called Driving Arkansas Forward organized to push for a constitutional amendment – The Arkansas Casino Gaming and Highway Funding Amendment of 2018 – that would allow three casinos to be built in Arkansas with the bulk of the tax revenue dedicated to highway funding.

The proposal would allow a casino to be built in Jefferson County, Crittenden County, and either Miller, Mississippi, Pope, Union or White counties. The Arkansas Department of Finance and Administration’s Lottery Division would oversee the issuance of licenses, which would be handled through a merit-based selection method. There can be no more than three casinos statewide and no more than one in each county. At least $100 million must be invested in each casino.

The proposal says that 65% of tax revenues would be dedicated to state highways, while 22.5% of revenues would go to the city where the casino is located and 10% to the county where the casino is located. The Arkansas Lottery Division, which would regulate the casinos, would receive 2.5% of casino tax revenue.

Potentially, casino revenues from the proposal could bring in an additional $45 million per year for Arkansas roads.

“The ambiguities noted above are not necessarily all the ambiguities contained in your proposal, but they (together with the other stated problems) are sufficiently serious to require me to reject your popular name and ballot title. I am unable to substitute language in a ballot title for your measure due to these ambiguities. Further, additional ambiguities may come to light on review of any revisions of your proposal,” she wrote.

Attorney Alex Gray with the Driving Arkansas Forward ballot question committee said his group would review the AG’s comments and planned to resubmit their proposal.

“We are reviewing this opinion, and we appreciate the constructive feedback provided by Attorney General Rutledge. We will address her concerns and resubmit the proposal for certification in the near future,” he said.

REJECTION HIGHLIGHTS
Rutledge listed four areas of significant concern in her rejection letter, although she held out the possibility of further “ambiguities” in the current proposal as well as future submissions that might contain revisions.

The proposed popular title – The Arkansas Casino Gaming and Highway Funding Amendment of 2018 – was one area noted by Rutledge.

“I believe there may be some question whether the words “Highway Funding Amendment” fairly represent the proposed measure without any ‘misleading tendencies’ or ‘partisan coloring.’ On the one hand, as reflected in the ballot title, the majority of the ’12% annual net casino gaming receipts tax’ under the measure will fund streets and highways. On the other hand, this is not a comprehensive highway funding measure. It is a comprehensive ‘casino gaming’ measure. I cannot confidently predict whether the Court would say calling it a ‘highway funding’ measure is fatally misleading. But I believe this language may overstate that feature of the measure and expose the popular name to the argument that it tends to mislead voters or give them only the impression the proponents wish to convey,” she wrote.

Rutledge also expressed concerns about two terms used in the proposal – “casino” and “casino gaming.” She noted several areas of the amendment where those definitions could cause confusion, uncertainty, lack of clarity, and questions about what may or may not be permitted should the proposal pass.

Finally, a provision of the proposal that dictates where casinos can be located references the Arkansas Economic Development Commission’s (AEDC) determinations of counties with certain economic distress. The AEDC ranks some of those counties by tiers, as in “tier 2, 3 or 4” counties.

Rutledge said voters may have no idea how these rankings work and the relationship of the tiers to AEDC’s normal course of business.

“These are technical references that do not have a ‘general currency among the public,’” she wrote. “Additionally, I believe the ballot title may confuse voters and lead them to believe there is some direct connection between AEDC’s actions and the proposed measure, including the measure’s identification of counties for casino locations.”

A copy of the AG’s letter can be found here.