Officials said Regent university funding is not immediately at stake as state officials consider ways to make up for an estimated $38 million shortfall in the 2002-2003 fiscal budget.

The loss was brought about by an Iowa Supreme Court decision Wednesday that said tax on slot machine income from racetracks could not be higher than tax on riverboat slots.

Before the court’s 4-3 decision, the slot revenue tax had been set at 32 percent for racetracks and 20 percent for riverboat casinos. The court declared the additional tax violated state and federal Equal Protection clauses and the tax level for both groups was set at 20 percent.

“The lawsuit was running through the system, but no one was looking for it. I think they didn’t focus on it, but then when the racetracks won this case, it really threw a monkey wrench in the system,” said Steffen Schmidt, university professor of political science.

“It’s like an unexpected bill that you find under a magazine in your living room. Actually, this is worse because this is a totally unexpected surprise.”

“The choices we have are to do nothing and just accept that loss of revenue, or we could raise the tax rate for both racetracks and riverboat casinos at an equitable level,” said Sen. Jim Lamberti, R-Ankeny, chairman of the Senate Appropriations Committee.

Lamberti said a tax rate for both groups higher than the current one would make up for the lost revenue while keeping taxes low enough to allow casinos to stay in business.

“[At an equalized rate,] I don’t think we are taxing the boats at a point at which they will be in danger, as the racetracks are at the 32-percent level,” Lamberti said. “My initial inclination would be between 24 and 26 percent. We just don’t have that analysis back from our fiscal bureau to know where that equitable rate would be.”

Ron Parker, spokesman for Gov. Tom Vilsack, said it would be too early to tell what will happen, but that by trimming funds for the Environment First program and renovation and restoration projects, or by raising the taxes on land-based and riverboat casinos, enough money could probably be raised for the upcoming fiscal year, which starts July 1.

“Right now, any discussions about that are premature because the decisions must now go to the district court to decide how far those payments go back,” Parker said.

If the state is held accountable for the past five years of disparities in tax between river- and land-based casinos, Lamberti said the state could owe three Iowa racetracks an estimated $110 million in inappropriately collected taxes.

“The time frame isn’t set yet, so the big payment could be due in the 2003 fiscal year, or it could be due in the next year,” he said.

Sen. Johnie Hammond, D-Ames, said whatever action is taken, it will wait until the next legislative session.

“I don’t know of anything the governor could do on his own. Equalizing the tax payments, which is a more long-range solution, would have to be done through legislative action,” Hammond said.

“I know no one wants to go back for a third special session.”

Schmidt said the casinos will most likely see raised taxes, but every state organization, including universities, is a potential place to make up the lost revenue.

“Everybody’s budgets are vulnerable because there’s not much fluff left,” he said.