House approves slots bill, but certain death promised in Senate

June 19, 2009 | Beth Musgrave | Comments 42

By John Cheves and Beth Musgrave

FRANKFORT — One way or another, a proposal to allow slot machines at horse racetracks will die on Monday, predicted Senate President David Williams, R-Burkesville.

The dire forecast came hours after the measure cleared the House in a 52-45 floor vote, the first for an expanded gambling proposal after more than a decade of debate in Frankfort.

The resulting “racinos” would generate hundreds of millions of dollars a year for the state’s horse industry and school construction projects.

Shortly after approving the slots bill, the House recessed until 4 p.m. Monday without physically delivering the bill to the Republican-led Senate for its consideration.

Williams said that was done because House leaders know the measure does not have the votes in the Senate and wanted to give slots supporters time over the weekend to lobby senators.

“They knew we would have immediately had a committee meeting and killed the bill,” he said.

Several senators said late Friday they already were receiving calls from various school superintendents seeking support for the slots bill.

Williams said the Senate will officially end the special legislative session that began June 15 if his chamber does not receive the slots bill by 4:30 p.m. Monday.

“Enough is enough,” he said, noting the session costs taxpayers about $60,000 a day, including weekends.

If the House bill gets to the Senate before 4:30 p.m. Monday, Williams said, it will be assigned to the budget committee, where it will die.

Senate budget chairman Charlie Borders, R-Grayson, said his panel would give the bill “a fair and full hearing,” but “there is no doubt in my mind that it would die there.”

House Speaker Greg Stumbo, D-Prestonsburg, issued a statement late Friday saying he wasn’t aware the Senate wanted to move so quickly on the slots bill.

“We would have been glad to have worked through the weekend had the Senate asked to do so,” he said. “We will return on Monday, looking forward to continuing the legislative process.”

Even as the House voted on the slots bill, Williams presented to the Senate budget committee his alternative plan to help the horse industry, one without expanded gambling, which he opposes.

The proposal cleared both the committee and the full Senate on Friday.

Williams’ plan raises $85.6 million to help supplement Kentucky horse racing purses and breeder incentives by taxing lottery tickets and out-of-state race betting.

It initially included a plan to place a 10 percent tax on charitable gaming but the committee removed that provision.

Even without proceeds from taxing charitable gaming, Kentucky’s average track purse supplement of $46,658 would be higher than any other state’s, he said.

Still, it’s not even clear if lawmakers can legally consider Williams’ proposal during the special session because only a governor can set its agenda. Beshear earlier declined to put Williams’ proposal on the agenda.

Jay Blanton, a spokesman for Beshear, said the governor’s office has not had an opportunity to study whether Williams’ move violated the governor’s intent. “That is not something that we’ve looked at in any kind of depth,” Blanton said.

In the House Friday, the debate over slots at racetracks lasted more than three hours. Supporters said slots would help the state’s horse industry by producing millions of dollars to fatten racing purses and breeder incentives. Presently, they warned, a dozen states with racinos are siphoning off Kentucky’s precious horse supply, and with it, the state’s signature industry.

“The evidence is clear and convincing that the wolf is at the door,” Stumbo told the House. “It’s time we do something now.”

Also, Stumbo said, thanks to more than $190 million a year the state is projected to collect from slots’ net revenue, Kentucky could issue bonds to pay for $1.3 billion in school and university construction projects.

“This is the largest elementary and secondary school construction project in the history of our commonwealth,” said Rep. Harry Moberly Jr., D-Richmond. “This is a very important part of this bill.”

Stumbo said old, crumbling schools across the state would be replaced, with lawmakers getting to help decide which schools from their districts could go on the list.

He refused to say if lawmakers voting against the slots bill would be punished by having their schools removed from the House’s projects list. The list will not be unveiled until the House budget committee takes up its plan to balance the state budget on Monday.

Critics of the bill said gambling is a poor way to finance state government. They also challenged the legality of the bill, arguing that the 1988 constitutional amendment creating the Kentucky Lottery prohibited further expansion of gambling without another amendment.

If the bill becomes law this year, slots opponents are expected to challenge it in court.

During the debate, Stumbo dodged several questions from Rep. Danny Ford, R-Mount Vernon, who asked him how much Kentuckians must wager on slots every year to produce the state’s projected take of more than $190 million. When Stumbo finally said he did not know the total, Ford said he’s seen estimates ranging from $6 billion to $7 billion, which could devastate people gambling away their paychecks.

“We’ve chosen a path that I think has a tendency to hurt families,” Ford said.

Rep. Stan Lee, R-Lexington, warned of an increase in crime in communities with expanded gambling, as well as corruption in government as gambling interests seek to buy inside favors. Lee invoked the 1990s Operation BOPTROT scandal in which more than a dozen Kentucky legislators — including the then-House speaker — were convicted for selling their votes on gambling legislation.

Once Kentucky legalizes slot machines at racetracks, the gambling industry will return for table games at racinos, and then freestanding casinos, as has been seen in other racino states, Lee added.

“Slots will never be the end of it,” Lee said. “You know it, I know it and the citizens of this state know it.”

In addition to the slots proposal, the bill includes an income tax break for active-duty military personnel and a sales tax break for horse farm supplies, including feed, bedding and grooming materials. It also establishes an income tax credit for half the value of the annual state property tax on motor vehicles.

Rep. John Tilley, D-Hopkinsville, told lawmakers the military income tax exemption would benefit his district, which includes the Army’s Fort Campbell. Many of that base’s 31,000 soldiers live just across the state line in Tennessee because that does not have an income tax, Tilley said.

“Tennessee has embraced the armed forces,” Tilley said. Although Kentucky may lose an estimated $18 million a year through the credit, it could gain much by having more military families buy or build houses in Kentucky, he said.

The House turned back two attempts to amend the bill. Rep. Eddie Ballard, D-Madisonville, wanted slots legalized for community service organizations, such as veterans clubs, and not just at racetracks. Rep. Jim DeCesare, R-Bowling Green, wanted to keep the bill’s tax credits but remove the slot machines legalization.

Filed Under: David Williams • Featured • Mitch McConnell • State Budget • State Government

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House approves slots bill, but certain death promised in Senate

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