• By MARSHA SHULER
• Advocate Capitol News Bureau
• Published: May 28, 2008 - Page: 1A - UPDATED: 12:05 a.m.

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The Louisiana Senate on Tuesday agreed that city-parish officials should have more leverage to get the two Baton Rouge riverboat casinos to pay more local taxes.

The Senate voted 27-3 for legislation that would allow the city-parish to assess a tax of up to 6 percent of net monthly gambling revenue, which operators of one casino said would amount to a 140 percent increase over today’s rate.

Eight senators did not vote on the legislation sponsored by state Sen. Yvonne Dorsey, D-Baton Rouge and pushed by Mayor-President Kip Holden.

“Baton Rouge riverboat fees are the lowest in the state,” Dorsey said.

Holden said the riverboat casinos are not paying their fair share for police, fire and other services. But the casinos would benefit from riverfront development plans.

“They want the cream without milking the cow,” Holden said in an interview after the Senate vote.

Today, the parish collects a $2.50-per-passenger boarding fee from the boats.

Under a law passed last year, riverboat owners and city-parish officials could negotiate a contract based on net gambling proceeds instead of boarding fees. The rate could not exceed 4.5 percent of the proceeds.

Holden said the city-parish has been trying to negotiate with owners of Hollywood Casino and the Belle of Baton Rouge for a year. The city-parish decided to force the issue with legislation that would give it the authority to set the tax, he said.

Penn National Gaming Inc., owner of the Hollywood Casino, has made four or five “good faith” offers, Penn’s vice president for governmental relations Richard Klemp said. “It has not been enough for the parish.”

Klemp said Hollywood Casino paid the city-parish $3.5 million in 2007. The 6 percent maximum that could be levied under the legislation would mean Hollywood would end up paying $8.4 million, he said.

Similar numbers were not available for the Belle of Baton Rouge. Two phone calls to the Belle’s management office were not returned.

The Senate vote signals to the city-parish “that they can get more. They have no motivation to negotiate,” Klemp said.

“They put us in an awkward situation,” he said.

The city-parish push comes at a time when the economy is slowing, skyrocketing gasoline prices are impeding travel and competition from a third riverboat casino is on the horizon, Klemp said.

Holden said Pinnacle Entertainment, which won voter approval to locate a riverboat casino down River Road from LSU, already agreed to pay a 4.5 percent of net monthly gambling revenue.

Recently, Holden said Penn offered to pay 3.5 percent of the first $100 million of net monthly gambling and 4.5 percent above $100 million, but then reneged.

Hollywood Casino general manager John Zimmerman said last week that Penn had presented a conceptual proposal to pay 2.75 percent of the first $100 million and then 4.5 percent thereafter.

On Tuesday, Klemp said the most recent offer was 3.5 percent of gross monthly revenue up to $120 million and 4.5 percent thereafter “and that was rejected.” He said that would have added $1.6 million to the $3.5 million Hollywood pays today.

Holden argues that the $2.50 boarding fee yields the lowest revenue of any of the state’s riverboat casinos while the boats are reaping major profits. He said Hollywood has the highest return on revenue after taxes of any boat in the state and the Belle ranks third.

Other boats have taxes based on net gambling revenue of anywhere from 3.9 percent in Lake Charles to 5.5 percent in Jefferson Parish, Holden said. The boarding fee in Baton Rouge equates to about 3 percent, he said.

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