CHARLES TOWN – A bill that would strip statutory requirements for lottery funding earmarked for horse racing purses and make that funding subject to regular appropriation by lawmakers could put existing casino gaming in Jefferson County at risk and decimate the area’s economy, a leading state senator said.
Senate Majority Leader John Unger, D-Jefferson, said Monday that if House Bill 4333 passes in its current form it would devastate a thoroughbred racing industry that accounts for thousands of jobs in Jefferson County as state lawmakers answering to far away constituencies would have few reservations about diverting that money for other purposes.
Unger said he is concerned that if million of dollars in lottery proceeds are no longer required to supplement purses and breeders awards, but are instead allocated annually at the discretion of legislators, that could trigger a backlash from residents in Jefferson County who approved casino gambling in part as a way to revitalize its moribund racing industry and result in their pushing for a recall on casino gambling.
“It’s a direct assault on the people of Jefferson County and the Eastern Panhandle as a whole,” Unger said. “It’s a direct assault in raiding the money that very well helps economic development and growth in our area. That’s just unacceptable.
“I think it could lead to a potential referendum, a recall in our area for the track,” he said.
House Bill 4333, introduced on behalf of Gov. Earl Ray Tomblin as a way to help shore up a projected $146 million shortfall in the state budget by redirecting nearly $35 million in lottery proceeds to the state’s general fund, passed the West Virginia House of Delegates but failed to come up for a vote after undergoing significant changes in the Senate Finance Committee. It is widely expected that the legislation will be revived during an upcoming special session at Tomblin’s request.
The version that passed the House reduces by 10 percent for one year the share of lottery funds – which includes traditional lottery games as well as slot machines and table games – dedicated to various constituencies, including the state’s thoroughbred and greyhound racing industries.
However, changes made in the Senate Finance Committee to that legislation altered its language, ultimately making what have been statutorily mandated allocations of lottery funds since the introduction of the Racetrack Video Lottery Act in 1995 now entirely subject to the discretion of lawmakers.
In fiscal year 2013, the most recent year with data available, Lottery Commission figures show the racing industries in West Virginia received nearly $88 million in lottery proceeds.
“If the legislature appropriates that it is the end of live racing at Charles Town, without a doubt,” said Sen. Herb Snyder, D-Jefferson. “It may last for a couple of years. I don’t even think it will last three years. Purses will go to 50 percent of what they are and breeders’ funds will go to 50 percent of what they are and then there will be none. You will starve to death people in that industry.”
The governor’s original legislation had sought to cut nearly $39 million lottery fund distributions, namely through 15 percent reductions to various constituencies including funding for racetrack counties and municipalities.
The proposed cuts to racetrack counties and municipalities were later eliminated after intense lobbying, while the casinos – which saw no initial cuts – were later added with 10 percent reductions approved for their reinvestment and modernization funds.
The legislation, which passed the House 72-25, diverted nearly $35 million in lottery funds to plug holes in the budget gap and help West Virginia maintain its AAA bond rating.
Of that, the thoroughbred and dog racing industries stood to lose more than $6.2 million, including nearly $5 million in purse supplements, according to Lottery Commission estimates.
“What the House sent us was liveable,” Snyder said. “It cut 10 percent out of the purses and breeders’ funds. The 10 percent would have hurt, no question. But it wouldn’t have put the entire industry out of business.”
After the Senate Finance Committee had changed the legislation, Snyder’s proposed amendment to maintain the racing sectors’ status as a receiver of mandatory funding was rejected. But the legislation stalled after never reaching the whole Senate for a vote before the regular session ended.
Snyder said he expects the bill to be reintroduced if the governor calls for a special session. Snyder said he plans to propose the same amendment again to try to mitigate the legislation’s potential impact, but he acknowledged he faces an uphill battle as Tomblin has been lobbying hard for its passage.
“It’s unreal that we’re talking about undoing a statute where the voters of Jefferson County have already approved it under those terms,” Snyder said. “And we’re going to change it and start appropriating the money? I’m flabbergasted that this is even here much less that it’s the governor’s agenda.”
The state’s racing industries supported more than 7,300 jobs and generated more than $100 million in income for West Virginia workers in 2012, according to a recent West Virginia University study. Nearly 3,500 of those jobs and more than $48 million in employee compensation were accounted for in Jefferson County.
In all, Jefferson County accounted for nearly half of the $321 million in total business volume attributed to state’s thoroughbred and greyhound racing industries, the study concluded.
Unger said the fate of the state’s racing industry and many of its ancillary offshoots, including portions of the local farming and agriculture sectors, hang in the balance.
“The horsemen, if they don’t have stability, they won’t invest,” Unger said. “If they don’t invest, they won’t come. If they don’t come, all these other businesses that depend on it will start unraveling. I know it will definitely hurt our region and particularly Jefferson County.
“The governor says he wants to create jobs,” Unger added. “Well, I guess it’s not in our area. I guess it’s not in Jefferson County.”