Bill offers aid to tracks

Proposal would set up financing plan to sell bonds for construction

`It's subject to change'

Key legislators cool to idea, but many say help is needed

February 16, 2000|By William F. Zorzi Jr. | William F. Zorzi Jr.,SUN STAFF

State tax and lottery money would be used to help finance improvements at Maryland's privately owned horse tracks and betting parlors under legislation being pushed in Annapolis by track owners.

The legislation would set up a complicated financing arrangement in which a quasi-public agency would sell millions of dollars in bonds to pay for the improvements.

While much of the money to pay off the bonds would come from bettors, some would be taken from an account funded by the state's racing tax. Other state tax and lottery revenues would be used to replenish that account. The arrangement appears to be designed to sidestep the politically volatile issue of providing direct state aid to pay for track improvements.

The state has pumped millions into the ailing racing industry in the last three years, including money for marketing and more than $25 million to boost purses.

Reaction to the proposal among key legislators has been cool, though many say they would like to find a way to help the tracks.

"The bottom line is that if we're going to have any taxes from racing, we've got to have racing," said Sen. Thomas L. Bromwell, a Baltimore County Democrat who is chairman of the Senate Finance Committee.

Del. Sheila E. Hixson, a Montgomery County Democrat who chairs the House Ways and Means Committee, introduced the bill Friday at the request of the state's thoroughbred and harness tracks. Hixson said the legislation will likely be heavily amended.

"It is not in the form that it's going to pass in," she said. "It's subject to change -- hourly, in fact."

Joseph A. De Francis, who holds the controlling interest in Pimlico Race Course and Laurel Park, said the bonds are needed to pay for about half of the $60 million in planned improvements at his tracks.

De Francis said to sell enough bonds and get the best interest rate, it would be necessary to use up to $2.8 million a year from the 0.5 percent racing tax -- and replace it with lottery and general fund money. "It's not practical to structure it differently," he said.

Legislators have expressed concern over the bill because of infighting among racing industry factions -- the track owners, horse owners and breeders -- and the fact that part of the money could be used to renovate off-track betting parlors.

Alan M. Rifkin, a lobbyist for De Francis, said the track owners did not intend the legislation to apply to off-track betting parlors and that the bill would be amended to make that clear.

Since the track owners floated the idea several weeks ago, the groups have been trying to find an arrangement that would hold all sides financially harmless. The proposed legislation went through several drafts to try to address the concerns -- without success.

The horse owners and breeders are unhappy, in part, because the bill does not include a funding source to continue state aid to boost purses and the breeder funds.

"We may do nothing if this keeps up," Hixson said.

Under the proposal, the state would authorize the Maryland Economic Development Corp. to sell an unspecified amount of bonds. The proceeds would go toward improvements at the tracks, including the renovations at Pimlico and Laurel.

Money to repay the bonds would come from an increase in the so-called "takeout" -- money the tracks take out of the bettors' payoff pool for specific uses.

But unlike a plan floated last summer by the track owners, the legislation also would allow up to $2.8 million a year in racing tax revenue to be diverted from a special account to pay the debt.

To replace the money in the account -- which pays for agricultural fairs, among other things -- the bill would use excess lottery revenue or money from the state's general fund.

The takeout increase would be enough to cover payments on an estimated $23 million in bonds, while the racing tax revenue could cover up to another $28 million, De Francis said.

Michael Morrill, a spokesman for Gov. Parris N. Glendening, said his office had not seen the proposal and could not comment.

"The tracks have committed to improvements in management, facilities and marketing, and the governor wants to see those commitments fulfilled," Morrill said.

"The governor's priorities remain that the tracks fulfill the commitments they've already made."

In Annapolis

Today's highlights:

House of Delegates meets, 10 a.m., House chamber.

Senate meets, 10 a.m., Senate chamber.

House Commerce and Government Matters Committee hearing on HB 225, to ban police use of racial profiling in traffic stops, 1 p.m., House office building, Room 140.

House Judiciary Committee hearing on HB 228, to allow children to use cell phones at school during after-school hours, 1 p.m., House office building, Room 120.

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