Slots could pay for tax cut, save race tracksI read with...


February 08, 1997

Slots could pay for tax cut, save race tracks

I read with great interest recent news accounts regarding my proposal to authorize slot machines at some Maryland racetracks. My proposal should not be interpreted as support for casinos throughout Maryland. I do not support the legalization of casino gambling and I am not interested in having my proposal serve as a ''foot in the door'' for future gambling establishments.

My support extends only to slots at Laurel, Pimlico and Rosecroft, destinations where people currently gamble legally. I do not support gaming at any other site.

I have no interest in authorizing slot machines just for the sake of bringing slot machines to Maryland. However, revenue generated from slot machines placed at existing gaming facilities can be a part of the solution for achieving several priorities.

Gov. Parris Glendening and many legislators are convinced that Maryland needs to cut its personal income tax rate. While I am not convinced this is the direction we should be taking, I must be prepared for the prospect of this 10 percent reduction, which would decrease state general fund revenues by $440 million a year.

At the same time, the governor has submitted an extensive list of feel-good spending proposals. Legislative fiscal estimates project that, if these proposals and the tax cut are fully implemented, Maryland faces a shortfall of $512 million in 2001.

Unfortunately, tax-cut proponents have not adequately explained how this shortfall will be met and seem content to postpone tough decisions until after the 1998 election. I do not believe in that type of approach.

As every family knows, it is not wise to increase spending and decrease revenues at the same time. To pay for the income tax cut, the state must make tough budget decisions, increase other revenue streams, raise other taxes, or do a combination of all these things.

Governor Glendening has decided to double the tax on a declining revenue stream, tobacco, spend money from the Reserve Account (Maryland's ''savings account''), and make unidentified budget cuts. This is not sufficient.

A family would plan to reduce spending in certain areas by eating out less or reducing its car payments or its phone bill. The family would not pin its future on a general pledge to reduce spending somehow, somewhere. And it certainly would not plan on spending money on a whole range of new items, no matter how much they would like to have those items.

Governor Glendening believes a tax cut means jobs. Currently, Maryland has an industry that provides jobs to 16,000 Marylanders and contributes almost $1 billion annually to our economy -- the horse industry. Breeders, trainers, farm owners and track employees operate more than 900 horse farms on 200,000 acres.

This industry faces enormous artificial competition. For instance, one-fifth of the $2.2 billion wagered at Delaware race-track slots came from Maryland bettors.

The governor and others may be content to watch as the industry dies on the vine and the Preakness gets sold off like the last chattel in a going-out-of-business sale, but I am not. We can study the industry and hope the issue goes away until after the next election, but the proverbial horse may be out of the barn by then.

My proposal is a limited, reasonable plan to preserve the racing industry and raise revenue to pay for the income tax cut and the rising demands for education money in our local jurisdictions.

The slot machines will be owned by the state, audited by the state, controlled by the state and regulated by a Maryland Gaming Commission. Operating costs will be approved by and paid for by the gaming commission. A fair share of the proceeds will go to horse racing purses, the engine that drives the industry and which is distributed among the horsemen and breeders, and to improve the antiquated track facilities.

After paying the track operators a commission no greater than the fee paid state lottery agents, proceeds will go to the state to fund the income tax cut and the anticipated increase in $l formula-driven education funding, and to the local governments that are home to these facilities.

It would be irresponsible of me to put my head in the sand, hold my breath and hope everything will turn out all right. Instead, I am attempting to respond to a real threat to an important industry and tradition, and a fiscal crisis waiting to happen for Marylanders in the near future.

Thomas V. Mike Miller Jr.


The writer is president of the Maryland Senate.

Pub Date: 2/08/97

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