Relief bill excludes casinos

Post-Katrina measure leaves out major employer, revenue source


WASHINGTON -- Before Hurricane Katrina, the Gulf Coast was well on its way to becoming a popular gambling destination. Now, for the gambling 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 approved legislation yesterday 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, a Nevada Democrat.

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 R. Wolf, a Virginia Republican.

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 gambling.

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

In an interview, Rep. Charlie Melancon, a Louisiana Democrat, 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. The bill would allow businesses an additional 50 percent depreciation deduction for a range of expenses.

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 this month and two others early next year.

The provision may not survive House-Senate negotiations on a final bill, given opposition from a number of influential senators. The opponents include Sens. Charles E. Grassley, an Iowa Republican, and Thad Cochran, a Mississippi Republican.

"Any lawful business activity shouldn't be excluded" from the tax breaks, Cochran said.

Frank Coleman, senior vice president at the Distilled Spirits Council, called the exclusion of the liquor stores from the bill "an inexplicable blow" to the region's devastated hospitality industry.

"These are small, family-run liquor industry that have lost everything in the hurricanes," he said. "It seems a little heartless to single them out."

Richard Simon writes for the Los Angeles Times.

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