Appelate court ruling on taxing slot machines to boost Montville revenue

Montville - The town is expecting an unanticipated $129,000 in revenue from taxes on Mohegan Sun's slot machines, which were recently put back on the grand list after an appellate court decision last month.

In July, the 2nd U.S. Circuit Court of Appeals ruled that the Mashantucket Pequot Tribe was legally obligated to pay taxes to Ledyard on nontribal leased personal property, such as the slot machines at its Foxwoods Resort Casino.

That decision overturned a district court decision in favor of the Mashantuckets, who argued that federal law prohibits state and local taxation on nontribal organizations that do business on reservation lands.

Under a memorandum of understanding between Montville and the Mohegan Tribe, the tribe agreed to pay taxes on nontribal personal property. Although that understanding was reached sometime in the 1990s, according to Mayor Ronald McDaniel, the town did not include taxes from slot machines in its revenue estimates for the 2013-14 budget because it was not sure how the ruling in the Ledyard case might affect the situation.

At a Town Council meeting on Monday, Finance Director Terry Hart announced the unanticipated funds and estimated that the undesignated fund balance will be up 4.3 percent from last year and on the high end of how much the town usually sets aside each year.

Hart told The Day in July that one Mohegan Sun slot machine vendor had been withholding taxes pending the outcome of the Ledyard case.

Most slot machine vendors had paid taxes for last year anyway, said McDaniel, "so it wasn't a huge issue for us."

The town spent $4,420 between September 2012 and March 2013 researching the Ledyard case and related laws to learn how the case's outcome might affect Montville, according to invoices from the town's law firm.

Montville used firm Suisman, Shapiro, Wool, Brennan, Gray & Greenberg to conduct the research and explain the potential application of the law. Attorneys with Suisman Shapiro also met with Mohegan Sun officials and drafted a letter to slot machine vendors, according to the invoices.

k.catalfamo@theday.com

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