Too soon to determine smoke ban’s revenue impact

HELENA – Since Helena voters approved the clean indoor air ordinance in June, word on the street has been that business in bars and casinos has suffered greatly. Business was down as much as 60 percent at some casinos, hospitality industry officials told the IR last month.

The state recently released the first tax-collection statistics that cover some of the time the ordinance has been in effect. The smoking ordinance was in effect for only one of the three months included in the most recent figures, which cover April through June of this year. However, other cities enacting bans have shown that any economic impact is greatest immediately after the ordinance passes.

One expert says it’s impossible to draw any conclusions at all for the numbers through June.

“It’s just too early to tell,” said Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana. “You need at least one full quarter to know. Maybe they had two heavy months in April and May. There simply isn’t enough data yet.”

Steve Morris, a local restaurateur and president of the Montana Tavern Association, was out of town Tuesday and unavailable for comment.

There are, perhaps not surprisingly, several ways to read the early numbers, but none of them indicate the heavy decreases claimed by local UFABet casino owners. Again, the most recent numbers available include only one month of the ordinance; a clearer picture won’t emerge until October, when the first quarter of fiscal year 2003 (July through September) becomes available.

In Helena, the fourth quarter of this fiscal year (April through June) showed a 6.4 percent increase in gambling taxes collected over the same quarter of 2001. That’s slightly below the 7.3 percent jump from the fourth quarter of 2000 to the fourth quarter of 2001.

Helena’s 6.4 percent gain in the fourth quarter of 2002 over 2001 compares favorably with the gains shown in Butte (4.1 percent), Great Falls (3.9 percent) and Missoula (4.1 percent) but falls short of the 10.1 percent increase reported in Billings.

As it has in each of the last three years, Helena showed a drop in revenue from the third quarter to the fourth. But the drop this year was steeper than in years past. Revenue from Q3 to Q4 of 2002 slipped 3.8 percent, versus a drop of around eight-tenths of a percent between the same quarters the previous year and six-tenths of a percent in 2000.

Another popular theory has been that smokers who like to gamble were leaving the city to flood the machines in East Helena and the rest of Lewis and Clark County, but that appears not to be the case, if the early numbers are any indication.

East Helena’s revenues increased only 2.2 percent from the third quarter to the fourth quarter this year. That’s less than the 2.7 percent increase between the same two quarters in 2001. In 2000, East Helena’s gambling taxes slipped less than 1 percent between the third and fourth quarters.

In the rest of Lewis and Clark County, a more substantial increase in taxes from the third quarter to the fourth was reported, but that seasonal increase takes place every year and was much smaller this year than in previous years. Revenues increased 16 percent from the third to the fourth quarter in the county this year, versus a 29 percent jump in 2001 and a 23 percent increase in 2000.