A one-time impact tax paid by one casino development in Vicksburg will not be paid by the two now planning construction, Mayor Laurence Leyens said Monday.

That means Rainbow, which paid nearly $4 million into the fund, will likely sue, it’s manager responded.

&#8220There’s no legal basis to assess an impact tax,” Leyens said when asked about nearly $13 million that might have been due from Lakes Gaming and Pot of Gold developments.

Former North Ward Alderman Gertrude Young agreed about the legality issue, saying the tax was legal when imposed and collected from Rainbow – but she believes the method of taxation has since been invalidated.

Leyens said that instead of the tax, the new developments will be asked to make voluntary contributions to city projects.

If that’s the course the city chooses, Curt Follmer, senior vice-president and general manager of Rainbow casino, said his company may pursue legal action.

Casino development began in Vicksburg after a second countywide referendum resulted in voter approval in December 1991.

The first three casinos to open were subjected to four taxes based on revenue and gaming positions. By the time the construction started on the fourth, Rainbow, in December 1993, city officials had added the one-time impact fee of $5,000 per gaming position which only Rainbow has paid.

&#8220I didn’t do the tax and I didn’t spend one dime of the tax,” Leyens said, explaining that the money was collected and expended before his first administration began four and a half years ago.

He did not explain why he thought the tax was illegal, but Young, who was the North Ward alderman in 1993 and served until July, said the impact tax was used for infrastructure costs.

&#8220We built some more water towers,” Young said. &#8220We built a fire station and we did some more streets. We wanted to be sure our city did not lose when it came to the new industries.”

Follmer said a precedent was set with Rainbow paying the impact tax. &#8220I just want them to do the right thing,” he said. Notably, his company has encouraged development of more casinos as a way of increasing competition and overall business volume. When a development was proposed near Bovina on the Big Black River seven years ago, the company did not join those who said it would upset the existing market.

Both developments now in regulatory approval phases – Lakes, which may begin construction in January, and Pot of Gold, which has a zoning hearing tonight, are on the Mississippi River in south Vicksburg.

Leyens said Lakes Gaming has offered to donate money, probably a few million dollars, to the city’s recreation plans, including softball fields and a golf course.

He concedes any donation would be less than would be paid if the impact tax were collected from Lakes.

According to the plan for the Lakes casino, at $5,000 per gaming position fee, Lakes Gaming would pay the city approximately $7.7 million. Follmer said with information he has on Pot of Gold, its casino would owe about $5 million.

Mickey Fedell, Rainbow’s marketing director, said city officials claimed in 1993 that the tax was necessary because the casino was building south of the Mississippi River Bridge.

South Ward Alderman Sid Beauman, also in office four and a half years, said he didn’t know anything about the impact tax and did not wish to make a statement.

North Ward Alderman Michael Mayfield was not available.

Under state law and state-approved local ordinances, there are three continuing revenue-based taxes on casino operations. One is a state 8 percent tax on wagers at table games and slot machines. The second is a .8 percent state-set tax on wagers with the amount collected rebated to the city and county and split based on population. The third is a 3.2 percent state-approved local tax on wagers that is divided with 65 percent to the city, 25 percent to the county and 10 percent to the Vicksburg Warren School District.

Vicksburg also assesses $150 per year per gaming position and property taxes are paid to city, county and school treasuries based on the assessed value of casinos, hotels and other developments.

All four casinos in Vicksburg have gift shops, hotels and restaurants which collect state sales tax plus local tourism development (1 per cent) and bed (2 percent) taxes.