New York Gov. Kathy Hochul Wants New Casinos Help Funding Beleaguered MTA

Posted on: February 1, 2023, 11:44h. 

Last updated on: February 2, 2023, 01:01h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

The new casinos coming to New York may not just fund education, Gov. Kathy Hochul (D) said on Wednesday. She also wants proceeds to shore up the state’s embattled Metropolitan Transportation Authority (MTA).

Hochul
New York Gov. Kathy Hochul delivers her budget address Wednesday at the State Capitol in Albany. Hochul’s plan includes allocating revenues generated by new casinos to the state’s Metropolitan Transportation Authority. (Image: Mike Groll/Office of Governor Kathy Hochul)

Hochul made that announcement Wednesday afternoon as she unveiled her proposed budget for the 2024 fiscal year. The MTA, which includes subway and bus lines in New York City and commuter rail across other parts of the downstate region, is one of the state agencies covered in the $227 billion spending plan.

That agency faces a “fiscal cliff,” as it sees federal COVID-19 relief funding drying up and ridership still not returning to pre-pandemic levels. The MTA’s 2023 budget included an assumption of $600 million in new unidentified revenues in order to be balanced. In the next few years, the gap grows to $1.2 billion per year.

After the MTA Board approved the agency’s budget in December, Chairman and CEO Janno Lieber said they would need to “find creative ways” to address the authority’s revenue concerns.

Exact Amount Unknown

The new casino licenses, which will almost assuredly go to up to three downstate proposals, could be one of those creative ways. According to Hochul’s budget briefing book, a portion of the licensing fees and tax revenues will help fund MTA operations.

Specific amounts and timing are dependent on the license award process but are not anticipated until 2026 or later,” the briefing book stated.

During her budget address Wednesday, Hochul added the funding would come only from casinos located in the MTA’s service areas. That would also become a “dedicated” revenue stream for the agency.

If the state awards all three licenses, the one-time licensing fees will generate $1.5 billion in revenue. The tax rate won’t be decided until the licenses have been awarded. A study by Spectrum Gaming Group forecasts the annual tax revenue to be between $462 million and $826 million.

The state released the request for casino license applications last month. It’s uncertain as to when the state will award the licenses, as a deadline for submissions has not been set.

The governor was asked if state law would need to be changed to allow for her proposal.

While the constitutional amendment on the 2013 ballot that New York voters ratified stated that the casinos had a “legislated purpose of … increasing aid to schools,” the amended article in the state constitution does not specifically tie casino revenues to education.

“We’re not affecting education in this process,” she said.

Hochul’s budget also includes other sources of funding and cuts to make up for the MTA’s shortfall. That includes an increase in the payroll tax that contributes money to the authority, and nearly $500 million in additional funding from New York City government.

Other Gaming Items in Budget

Casino revenue wasn’t the only gaming-related item in Hochul’s budget. She’s also recommending the state provide a $455 million loan to the New York Racing Association for a large-scale renovation of Belmont Park in Long Island.

In addition, she’s also proposing to eliminate “certain antiquated restrictions” on state lottery vendors selling quick draw tickets. The state expects to generate an additional $11 million for education from that measure.

The 2024 fiscal year budget expects to spend $896 million in online sports betting tax revenue on education. Hochul Administration officials expect the 51% online sports betting tax to generate $646 million during the upcoming fiscal year. The additional funds will come from the higher-than-anticipated tax revenues over the past year.

Hochul’s proposal, however, didn’t include legalizing online casinos, also known as iGaming. That’s an issue that Senate Racing, Gaming, and Wagering Committee Chairman Joe Addabbo (D-Queens) has proposed. Nor did it include any language to expand the number of sports betting licenses, a measure supported by Addabbo and Assembly Racing and Wagering Committee Chairman Gary Pretlow, D-Mount Vernon.

Lawmakers could include the iGaming and sports betting measures in their budget proposal, and then try to keep them in the final version to be negotiated between the Hochul Administration and legislative leaders. The new budget must be approved by April 1, although that deadline has been missed in previous years.