06/11/2002 11:00PM

Windfall for Prairie Meadows


ALTOONA, Iowa - The Iowa Supreme Court on Wednesday ruled that a law that taxed Iowa's racetracks at a graduated rate is unconstitutional. As a result of the ruling Prairie Meadows is expected to receive a refund of about $50 million for taxes previously paid at the graduated rate.

Beginning in 1997, Prairie Meadows and the state's two greyhound tracks began paying taxes at a graduated rate. The rate began at 22 percent and has increased 2 percent each year. The rate for 2002 was set at 32 percent before the ruling and would have risen for two more years before being capped at 36 percent in 2004.

The state's riverboat operations have paid a 20-percent tax rate each year, and the tracks filed suit seeking to have their tax rate changed to the same as the riverboats.

The Supreme Court's ruling reverses a Polk County District Court ruling that upheld the original law. The Supreme Court ruling remanded the case back to the district court to determine the exact amount of relief the tracks will receive for prior overpayments.

Based on current revenue projections Prairie Meadows will save approximately $17 million in taxes this year by being taxed at the 20 percent rate rather than at 32 percent.