Guest column: Slots and horses don't mix in Md.
The following guest column was submitted by Delegate Gerron Levi.
At the outset, I want to commend Gov. Martin O'Malley for facing head-on the fiscal challenges confronting the state. He has asserted bold leadership and made tough decisions. I must respectively disagree with him on slots for Maryland, however. I have several reasons, but let's just start with one: State coffers and tax burdens are no better in many of the "racino" states and in some cases they are worse.
Twelve states have racetrack casinos, aka racinos, and some have even broader gambling. Twenty-nine states are facing budget gaps this year totaling about $48 billion - seven are those racino states, while another 11 are gambling states. Based on a 2008 analysis by the conservative Tax Foundation, four racino states are among the 10 worst in the country in terms of their business tax climate and half of the top 10 worst state-local tax burdens can be found in gambling states. Maine opened its first slots parlor in 2005, but by 2008 had enacted its first-ever tax on soft drinks, doubled the existing taxes on beer and wine, and levied a 1.8 percent tax on health care claims paid by insurers and third-party claims administrators. A repeal of the Maine beverage tax is on the ballot this fall.
According to the Center on Budget & Policy Priorities, at least five racino states are among the 13 states that have cut K-12 education, colleges and universities in their FY 2009 budgets, including: Delaware, Rhode Island, Florida, Maine and New York. Despite the wording of the Maryland ballot question on slots, the evidence from other states simply doesn't show that racinos unquestionably bolster education funding or state coffers. Money may get shifted around but there is no jump in revenues.
In short, residents in many racino states and other gambling states are paying more state taxes or other fees after gaming and are cutting or slowing education funding and other popular programs just like other states. It is only fair to ask whether racino states weather economic downturns much better than Maryland, since we are chasing that illusion.
The predictions on the $400 million to $700 million in revenue from slots are for 2012 and beyond and assume, for example, that Pennsylvania will not add more slot machines and thus diminish how much money Maryland can expect to make. How do we know that? Pennsylvania has 15,000 slots, is adding 1,200 more this year, and can host up to 61,000. That is a faulty assumption. All three racinos in Delaware have seen revenue declines this year, largely because of new competition from Pennsylvania.
The Maryland Lottery, which sent about $529 million in revenue to the state this year of which about half follows other state dollars to education could lose up to 10 percent of its revenues, by some estimates, as people play slots instead. Evidence from other states finds that other local entertainment venues also lose business to slot parlors, meaning those businesses will pay less taxes and hire fewer workers, etc.
Slots should not be seen as a way for the state to create jobs, either. I hope to create jobs that have collateral public benefits with few downsides. For example, building roads and schools creates jobs while also providing a public good: quality roads and public education. Encouraging renewable energy growth creates jobs while also reducing climate change. Gambling has little collateral public good, but it does have collateral detriments: more crime, gambling addition, foreclosures and bankruptcies. A 2002 study found that the state's top-grossing ZIP codes in lottery sales are in Baltimore City (21215) and inside the Capital Beltway in Prince George's. Lottery and slots target the same demographic and, fundamentally, I am concerned about taking dollars out of the poorest urban and rural communities to, theoretically, pay for programs in the wealthiest state in the nation.
I am proud of Maryland and its national identity: science, technology and education leader that has outpaced all 12 racino states in per capita income growth to become the wealthiest state in the nation. Why should Maryland follow Delaware, Pennsylvania or West Virginia?
If you are going to vote for slots, do so because you think it will support horse racing - the state's horse breeders, stallion owners, hay/straw suppliers, farriers and veterinarians, because it will not boost education funding or forestall future tax increases. The evidence from around the country simply isn't there.
