Slots plan to raise $900 million a year by '07, Ehrlich says

Governor addresses Senate budget committee

Analysts question his projections

General Assembly

February 12, 2004|By Howard Libit and Greg Garland | Howard Libit and Greg Garland,SUN STAFF

Gov. Robert L. Ehrlich Jr. said yesterday that his plan to legalize slot machine gambling would generate almost $900 million a year for the state within four years, providing nearly 70 percent of the money needed to pay for a landmark public schools funding plan.

"It's not the entire answer, but it's a significant part of the answer," Ehrlich said during a rare gubernatorial appearance before a legislative committee.

But legislative analysts questioned some of his projections, estimating the state might take in as much as $200 million less annually, in part because of potential declines in lottery sales.

Joined by Senate President Thomas V. Mike Miller, Comptroller William Donald Schaefer and Lt. Gov. Michael S. Steele, the governor argued that his proposal to legalize 15,500 slot machines at four racetracks and two other locations along Interstate 95 is crucial to the horse racing industry and to meet the school-funding increases promised two years ago in the Thornton Commission legislation.

Schaefer told lawmakers to stop doing one-time budget fixes year after year and make a commitment to generating new sources of revenue.

"As a taxpayer, I'm tired of this budget question," Schaefer told the Senate Budget and Taxation Committee. "It must be solved, and it must be solved this year. This is the year the budget must be balanced, and slots must be part of the answer."

Ehrlich and others who testified acknowledged that much of the hearing seemed familiar, as they repeated points made during last year's slots debate.

"Here we are again," Ehrlich said. "Groundhog Day. Same place. Same issue. ... Same need to fill the budget gap."

A crucial difference is the expanded number of slot machines - and two additional gambling sites - proposed by Ehrlich.

The governor's staff projects that the new bill would provide $894 million a year by the fiscal year that begins July 1, 2007, covering 70 percent of the $1.3 billion needed to fulfill the Thornton plan that year.

But the legislature's chief fiscal analyst, Warren G. Deschenaux, said his staff predicts that slots would generate about $734 million by that year, because of a lower estimate of the profits of each machine. The analysts also predict lottery revenues would decline $67 million in that period, as consumers switch to slots. Ehrlich's lottery director disputed that projection.

During the hearing, the governor called on lawmakers to help ensure a better outcome for his proposal this year. Last year, the Senate narrowly passed a bill permitting slots, but it was killed in a House committee.

Miller and Sen. Ulysses Currie, budget committee chairman, predicted that slots legislation will pass the Senate again this year. But prospects in the House are much more uncertain, as Democratic leaders have raised major questions about crucial elements of Ehrlich's plan.

The governor's presentation began an almost seven-hour hearing, as supporters and opponents of gambling testified in one-hour blocks.

Some of the most divisive testimony surrounded the possibility of slot machines at the Ocean Downs harness track, near Ocean City. An Ehrlich adviser told The Sun on Tuesday that the governor would consider permitting slots at Ocean Downs if there was community support.

Ocean City Mayor James N. Mathias Jr. said that community remains staunchly opposed to slots and that Ehrlich had promised to keep out gambling. "The people I see tell me keep the gambling out of Ocean City, out of Worcester County and out of Maryland," he said.

William J. Rickman Jr., owner of Ocean Downs, said he believes Ocean City's business community does support slots at the track. "Is Ocean Downs going to be the only track on the East Coast that doesn't have slots?" asked Rickman, who also holds the license to build the Allegany racetrack.

Sen. J. Lowell Stoltzfus, a slots opponent and Republican who represents the lower Eastern Shore, said adding slots to Ocean Downs would hurt Ocean City tourism businesses.

During the hearing, supporters talked about how slots could revitalize racetracks, increase jobs and revitalize economically depressed neighborhoods.

"It's not about burdening Baltimore City and Park Heights; it's about empowering our community," said Sen. Lisa A. Gladden, a Baltimore Democrat who represents the Pimlico Race Course neighborhoods. She asked that the bill include a promise for the state to pay for transportation upgrades around the tracks, and that the community be given more input.

Those who testified against the bill frequently told emotional tales of families ruined by gambling addictions.

Kimberly S. Roman, co-chairwoman of NOcasiNO Maryland, told the panel it needs to consider social costs of increased problem gambling. "I hope you will consider the hidden costs and damage to families of this regressive tax that some want to benignly call a painless revenue source," she said.

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