Wednesday, July 24, 1996

Tax on lottery winnings considered

By Associated Press

AUSTIN - Texas senators are considering a tax on lottery winners to pay for an ad campaign aimed at boosting the struggling charitable bingo industry.

The new levy also could offset the loss of state revenue from a proposal that would eliminate all or part of a 5 percent tax on bingo winnings, said Joe Garcia, staff aide to a special Senate committee reviewing bingo.

Garcia on Monday said no rate has been discussed for the lottery levy, which he said might apply only to lottery winnings of $2,500 or more.

"The lottery has a big advantage because they have a huge advertising budget," Garcia said.

"Charitable bingo is at a disadvantage no matter how you look at it. We are trying to come up with a method to make the charitable bingo people feel they are on the same level as the lottery."

The Texas Lottery Commission runs the state's games of chance and regulates about 1,800 bingo games run by charitable organizations, including about 260 with religious affiliations.

Garcia's comments came after Lottery Commission Chairwoman Harriet Miers expressed concerns about the loss of revenue that could result if the Senate committee's preliminary recommendations were adopted.

The proposals will be reviewed next month for presentation to the 1997 Legislature.
Total elimination of the bingo winners' tax would cost the state $24 million a year, according to Marc Garcia, the commission's bingo director.

Overall, the Senate panel's preliminary proposals could cost the state $26.5 million of the $28 million a year it collects from bingo.

An alternative plan would eliminate the bingo prize levy only on winnings of $250 or less.

Lt. Gov. Bob Bullock appointed the special panel in October, asking members to review the Texas Lottery Commission's regulation of bingo, determine whether more revenues from the games should go to the charities they benefit and determine whether any bingo hall owners engage in anti-competitive practices.

Miers said the preliminary recommendations from the Senate panel raise policy questions about the use of state money to boost bingo.

Texas voters legalized charitable bingo - then the only form of legal gambling in the state - in 1980.
"It's one thing for the people of the state of Texas to authorize charitable bingo and say we are going to have a process by which charities can choose to participate in this activity and raise money in this way," Miers said.

"It's another to say, 'I'm going to take state money that is generally available to benefit all the people and use that to subsidize the activities of the charities.' I think that raises a very serious question."

Jeri Finkelstein of Dallas, chairwoman of the commission's Bingo Advisory Committee, said taxpayers benefit from any changes that pump up bingo.

"It is much simpler to spend money from a nonprofit organization, with no bureaucracy, on behalf of the people of Texas who are in need," she said. "If (bingo winners) did not have to pay the prize fee perhaps there would be more money available for the charities to directly serve the population of Texas, rather than a governmental agency benefiting from the funds."