SHEPHERDSTOWN – State lawmakers have passed a bill that will permanently redirect 10 percent of thoroughbred and greyhound racing’s share of casino gambling revenue to help compensate for projected public funding shortfalls.
The legislation also makes permanent a nine-year-old shift in slot machine revenue to pay for the state workers’ compensation fund, a measure originally scheduled to sunset after the program was made solvent.
Horsemen warn the cuts come at a bad time as gambling revenue in West Virginia is increasingly pinched by competition from neighboring states. Racing advocates have said additional reductions in funding threaten to further destabilize an important local industry that supports thousands of jobs in Jefferson County and helps protect the environment by preserving open space.
The projected diversion of purse and breeder development funds is about $5.8 million for fiscal 2015, which begins July 1, according to West Virginia Lottery Commission estimates.
Since 2005, $11 million per year in slot machine revenue once earmarked for racetrack purses has been redirected to the state workers’ compensation fund.
The state’s four racetracks will also lose 10 percent, or $1 million per year, in revenue that goes to fund upgrades at those facilities.
Despite local opposition, the legislation overwhelmingly passed both houses of the legislature last week during a special session and was sent to Gov. Earl Ray Tomblin for approval.
“The option was either give up 10 percent or lose it all,” said Sen. Herb Snyder, D-Jefferson. “To put the purse and breeders’ money in the hands of the legislature would have been devastating. It’s clearly very much a win.”
Introduced at Tomblin’s request to help shore up a $146 million shortfall in next year’s budget, House Bill 4333 proposed to redirect $39 million in lottery proceeds from various constituencies, including thoroughbred and greyhound racing, to the state’s general fund.
The version that passed the House of Delegates was amended to remove cuts to counties and municipalities, while also decreasing the percentage in cuts to the racing industries. Cuts to the casino modernization fund were introduced.
But when the legislation arrived in the Senate Finance Committee it sat dormant for days before finally resurfacing at the 11th hour after having been rewritten to remove the long-standing statutory dedication of money to the racing sector, thus allowing lawmakers to distribute funding as they see fit through annual appropriations. The amended legislation failed to reach the Senate floor for a vote during the regular session.
“Where the legislature went, and I don’t think most legislators realized this, they’re undoing local referendum elections,” Snyder said. “Undoing what the legislature has done is a very serious matter. To break those promises that were made accepting local referendum elections is immoral.”
West Virginia passed slot machines in 1994 as a way to revive its moribund racing industry. The original legislation allowed residents in counties where racetracks are located to vote on whether to permit casino gaming at those tracks. That legislation also designated a certain percentage of slot machine revenue to go to purses and breeders’ funds and development awards.
“It’s a pretty bad place to go in law to start saying other laws don’t matter,” Snyder said. “It makes me sad to see the legislative process that I care very, very deeply about degraded to the level of what’s happened here.”
The legislation was reintroduced last week during a special session, where Snyder offered an amendment preventing the racing industry from losing its statutorily designated funding in return for accepting 10 percent permanent cuts in subsidies for purses and breeders awards. After intense and protracted negotiations, a deal was struck and funding for racing, though reduced, would remain intact in state statute.
“We certainly worried in the last three days that we would see some percentage drop below the line and be subject to appropriation,” said Delegate Tiffany Lawrence, D-Jefferson. “If it passed as it was then we would literally be asking the horsemen to come begging for appropriations yearly and there is no guarantee that any funding would be available in the future.”
The legislation, now reintroduced as House Bill 101, passed a special session of the House of Delegates on March 14 by a 75-16 margin. The same legislation passed the Senate on a 29-5 vote. All five legislators in the Jefferson County delegation voted against its passage.
“It didn’t turn out the way we would have hoped, but it certainly could have been a lot worse,” said Delegate Paul Espinosa, R-Jefferson.
For fiscal 2015, purses at the horse and dog tracks will drop by nearly $4.9 million based on current gaming proceeds. The thoroughbred breeding fund would take a $538,000 hit, while the greyhound breeding fund would lose about $366,000.
“It’s going to hurt,” said Ollie Figgins, III, a Charles Town-based thoroughbred trainer. “Ten percent doesn’t sound like a lot of money, but when you’re talking breeders’ bonuses and purse money over time that’s a lot of money. It’s going to affect the commercial value of the West Virginia breds.”
The cuts come at a bad time for the industry and its effects are likely to only be exacerbated by the existing climate. Encroachment from competing casino gaming interests in nearby states and years of changes in the way lottery revenues have been allocated have reduced the share of funding that reaches owners and breeders through purses and development funds.
Owners and breeders received approximately 15 percent of slot machine revenue when they were first introduced in 1995, but that share fell below 10 percent by fiscal 2013, according to a recent West Virginia University study on the racing industry’s impact on the state.
The amount of money gambled in West Virginia is also expected to drop further in coming years as more casinos come online in contiguous states.
“When we first got this they promised everything, but they’ve whittled away at it,” said Charles “Buck” Woodson, who owns the thoroughbred breeding operation Buckstud Farm near Charles Town. “I think connecting horse racing with slot machines was the wrong thing to do when it happened. It saved us. We were in bad shape. But it’s like grabbing a tiger by the tail.
“West Virginia is not the only place that’s doing it,” Woodson added. “It seems like that’s a trend going on now where they have the slot machines and casinos. They want to get rid of horses. Sooner or later they say we don’t need that, we make more money with the casinos.”