Missouri Amendment 5: Voters can OK or reject a new casino at the Lake of the Ozarks on Nov. 5

by Meg Cunningham, Beacon: Missouri
September 16, 2024

Missourians, long restricted to sites along the Missouri or Mississippi rivers for casino gambling, will decide whether to add another river to that list during the Nov. 5 election. 

Amendment 5 will ask Missouri voters if they want to allow an additional casino on the Osage River, near the Bagnell Dam at the Lake of the Ozarks, on the south side of U.S. 54. 

The plan is spearheaded by Bally’s, which operates a casino in Kansas City, and RIS Inc., a developer based in Eldon. The amendment is the result of a 10-year effort to build a casino and entertainment center at the lake. The site is part of the Eagles’ Landing development, which sits on both sides of U.S. 54. 

The proposal would amend the Missouri Constitution to allow an additional casino on the Osage River. The plan also includes a hotel, a convention center, restaurants and other attractions. It would override a state law that only allows 13 casino licenses by adding a 14th dedicated to the Osage River proposal. 

The proposal needs a simple majority statewide to pass. The revenue from the state’s gaming tax, estimated to be $14.4 million annually, will be allocated toward early childhood literacy efforts. 

The details of Amendment 5’s casino plan

Members of the Osage River Gaming and Convention Committee are the main backers of the proposal. The group has been eyeing a casino at the lake for years, toggling between pursuing the effort through the legislature or via a citizen-led initiative petition. 

Since lawmakers have the power to place questions on the ballot for voter approval, that was one path the committee started pursuing in 2020, after it announced its plan for the Lake of the Ozarks development. 

Former state Rep. Rocky Miller, a Republican from Osage Beach, initially spearheaded the legislative path to changing the constitution. After the bill failed in 2022 and 2023, the committee announced it would pursue the change through the initiative petition process. 

Backers of the proposal say the destination will create 500 construction jobs and create 700 to 800 permanent jobs.

To read the full text of the amendment, click here.

The city of Lake Ozark gave its backing to the plan in December. Local governments are estimated to receive around $2.1 million annually in admission and other fee revenue. 

The state estimates it will take in $14.3 million in gaming tax revenue annually, which will be dedicated to supporting early childhood literacy efforts. 

The amendment comes amid an effort from Osage Nation to build a casino at the Lake of the Ozarks. Osage Nation acquired land at the Lake of the Ozarks in 2021 and officially launched a plan to build a casino, which requires coordination with the federal government and clearance from the governor. 

The years-long effort to get Amendment 5 on the ballot

After a 2009 fire destroyed a gambling riverboat, the backers of Amendment 5 saw an opportunity to launch a casino at the Lake of the Ozarks, the Springfield News-Leader reported. 

The group of investors huddled with the intention of pursuing an additional license and getting voter approval to build on a new river. 

By 2018, the investor group was ready to launch a citizen-led initiative petition effort to get voter approval for gambling on an additional river. But Miller suggested the legislative route because it would cost less. 

After legislation struggled to get off the ground for a number of years, in part due to heavy opposition from Osage Nation, investors turned back to the initiative petition route, which was successful in 2024. 

This article first appeared on Beacon: Missouri and is republished here under a Creative Commons license.

Missouri tax revenues declining in first months of fiscal year, raising concerns

by Rudi Keller, Missouri Independent
September 17, 2024

Missouri’s general revenue has lagged behind inflation for two years in a row. And with that gap widening, the next few months could determine whether state revenue will see a year-over-year decline for the first time in more than a decade. 

“September is a good sort of bellwether one for us, because that’s where we get quarterly payments from both individuals and corporations,” Dan Haug, Gov. Mike Parson’s budget director, said in an interview with The Independent last week. “There’s not a lot of significant due dates in July and August, so we try not to even really look at what trends are until we get through the end of September.”

Through Friday, general revenue receipts are down more than 3% compared to the same period in fiscal 2024.

Revenue grew 2.74% in fiscal 2023, while inflation was calculated at 3% by the federal Bureau of Labor Statistics. In fiscal 2024, which ended June 30, revenue grew 1.47%, while inflation was again pegged at 3%.

Missouri isn’t the only state suffering from sluggish revenue growth, according to a recent report from Pew Charitable Trusts. During the COVID-19 pandemic, many states — including Missouri — enjoyed a surge of revenue that drove new spending and tax cuts.

Missouri enjoyed double-digit revenue growth for two years, a trend that ended in early 2023. Nationally since the start of fiscal 2023, the report states, state government revenues have fallen below inflation rates and below the growth trend seen before the pandemic. That is the first time in 40 years that has happened outside of an economic recession.

“There’s less fiscal flexibility, but it’s unclear whether states will be really under strain or not, but it’s going to be more difficult than before,” said Alexandre Fall, a senior associate with Pew who was the main author of the report.

As they wrote this year’s budget in the spring, the Republican-led legislature tried to limit ongoing general revenue spending to the anticipated revenue of $13.2 billion. But even after Gov. Mike Parson vetoed $1 billion, the budget anticipates spending $15.1 billion in general revenue, dipping into surpluses accumulated during the surge in 2021 and 2022.

House Budget Committee Vice Chairman Dirk Deaton, a Republican from Noel, said lawmakers must continue to limit ongoing spending to new revenue.

“If revenue is lower in the future we will have to look carefully at core spending items to make sure the state budget is on a sustainable path and Missouri is well positioned to balance the budget year after year,” Deaton said.

State revenue was down in the early part of fiscal 2024 but ended up with modest growth, Deaton noted.

State Rep. Peter Merideth of St. Louis, the ranking Democrat on the Budget Committee, said future legislatures should commit to meeting state needs instead of hanging on to surpluses. Merideth is not returning to the House due to term limits.

Any spending cuts tied to the flow of revenue, rather than to the state’s total available resources, will fall heavily on education programs, Merideth predicted.

“We will cut education further,” he said. “Maybe it’s on the transportation line, or maybe it’s somewhere else, and we will cut higher education because those are about the only two slightly discretionary places that the legislature has to cut with large sums of money.”

Sitting on a surplus

On June 30, the general revenue fund held $4.8 billion, down $960 million from the balance a year earlier. That is still the third-highest year-end balance in state history.

Some of that money is committed to multi-year building projects, such as a $300 million mental health hospital in Kansas City, but most of it is unencumbered.

Other surplus money was stashed elsewhere. The state is holding $2.4 billion transferred from general revenue for major projects including rebuilding Interstate 70 and expanding the state Capitol Building. 

Another $1.8 billion was held in accounts that can be spent like general revenue.

The question for lawmakers and state officials is how to spend from surplus funds without exhausting them, said Liz Farmer, a fiscal policy writer at Pew.

“States are spending down balance dollars at a rapid rate,” Farmer said. 

The budget presented by Parson in January anticipated an unencumbered general revenue balance of $1.9 billion on June 30, 2025. 

Along with major projects, in the past two years lawmakers have used the surplus to fund smaller items in their districts. Parson has vetoed many of those items as he cut $550 million from the budget in 2023 and $1 billion approved this year. 

Future lawmakers need to resist the urge to earmark funds for their district, Merideth said. Stagnant or declining state revenue should mean extra funds are reserved for filling shortfalls in important programs.

“We have a surplus to work with in the short term but we haven’t hit an economic crash, which at some point will happen in the future,” Merideth said. “That’s when we’re going to be in real trouble.”

During the recession that began in 2008, revenues fell from about $8 billion annual to $6.7 billion a few years later. Haug, who has worked for both the legislature and the executive branch, said the state is in good shape in case of a recession.

“We’ve got a very healthy fund balance to help us get through a minor downturn, if there is one, although I’m not sure that there even will be one,” Haug said. “We’re in a lot better spot to weather this kind of stuff than we’ve been probably in any of the time I’ve been here.”

There are structural changes in the cost of state government that are permanent, thanks to the surge of revenue. 

The pay of every state worker hired before the beginning of 2022 has increased at least 20.7% under pay raise plans proposed by Parson. Some workers have received much larger percentage boosts, from a longevity pay plan approved this year, increases in night pay for workers in prisons, mental health hospitals and other custodial institutions and approval of a minimum salary of $15 an hour for all state jobs.

With state agency staff vacancy rates averaging more than 10%, the cost of running the state will go up as workers are added.

“Increased state employee pay and salaries, as well as permanent tax cuts, were two very popular policy choices that were made across states and were made in Missouri,” Fall said. “But now that we’re seeing all this excess revenue kind of pull back, and states are seeing decreased flexibility, it’s unclear what comes next.”

Missouri has passed two large permanent tax cuts, with income tax rate cuts enacted in a special session in 2022, and a bill exempting Social Security benefits from state income tax in 2023.

Together, that legislation will reduce state revenue by $1 billion or more annually. The next step in the phased-in tax cut passed in 2022 will take effect on Jan. 1, cutting the top income tax rate to 4.7%.

Those cuts will generate economic activity that will sustain revenues, Deaton said.

“Missouri has made very clear through our tax policy we are more interested in growing the bank accounts of the people as opposed to growing the amount of monies coming to Jefferson City,” he said.

With a new governor coming into office in January and new legislative leadership, tapping the surplus could be a temptation.

“Whoever is sitting in that governor’s mansion and whoever is sitting in the budget committee chair will make a significant difference and it’s hard to predict,” Merideth said.

Revenue picture

In the last full fiscal year before the pandemic, the Missouri general revenue fund took in $9.6 billion. In the fiscal year that ended June 30, the total was $13.4 billion, 1.47% more than in the previous year.

Two of the main sources of state revenue — personal and corporate income taxes — saw a decline in collections in fiscal 2024. So far this year, the decline in revenue received so far has extended to sales tax collections.

The surge in revenue coincided with the highest inflation rates in 40 years and sales tax growth led the way, thanks to consumers spending federal pandemic relief aid along with higher wages and prices.

There is no evidence in the Missouri economy that would show the current decline in sales tax collections is anything but temporary, Haug said.

“People may be pulling back a little bit temporarily to pay off debt and things like that, but eventually the fundamentals are what’s going to drive it,” Haug said. 

Missouri added 62,400 jobs from July 2023 to July 2024 and personal income grew at an annual rate of 6.7% in the first quarter of the year. State GDP is up 1.6% on an annual basis and inflation, while slowing, continues, with prices nationally about 2.5% higher than a year ago.

“Long term, that’s what’s going to drive our revenues, and I think that’s still what’s going to drive our revenues,” Haug said.

With the end of pandemic restrictions, consumers are spending more on non-taxed services and travel, Farmer said, as well as substituting cheaper goods when they make purchases.

Missouri estimates its revenue each December for the remainder of the fiscal year and the coming year. A longer horizon for budget outlooks would make the state better prepared for possible trouble, she said.

“That is one of our key benchmarks for state fiscal health, and something that could be really helpful for assessing what these impacts on personal income tax and those cuts look like for the state down the line for revenue,” she said.

A longer-term outlook may be helpful, Deaton said, but experience shows that the short-term estimates aren’t particularly accurate.

“There have been times they were very close and other years when estimates missed badly,” Deaton said. “The further you extend out, the greater the margin of error.”

Missouri Independent is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: [email protected]. Follow Missouri Independent on Facebook and X.