Stephens bill could crush horse racing in Pennsylvania

02:36 PM 31 Jan 2014 NZDT
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Harness racing
PA bill would take $250 million from Horse Development Fund

Since money from slots started pumping up purses for horse racing in Pennsylvania, the owners who took home a payday have included a sheik, a prince from the Middle East, millionaires and billionaires.

Proposed legislation would take nearly all of the money from the state's Horse Racing Development Fund and redirect it to school districts that receive less than 35 percent of their funding from the state. Rep. Todd Stephens (R-Montgomery County) said his bill would provide relief for local property taxpayers and address the imbalance in the state's school funding formula.

Stephens' bill would shift $250 million from the development fund to school districts receiving less than average state funding.

"The bottom line is only people with means can get into horse racing and they're the ones winning these purses," Todd said. "Right now, we have to prioritize our spending. We have a constitutional obligation to our children -- frankly I think we have a moral obligation to our children as well -- to provide them with a thorough and efficient school system and …. we are not doing that."

Many of the school districts that would benefit are in counties that have grown since 1991, when the state froze the school funding formula. Most of the districts in the midstate would benefit. In Adams County three of six districts would receive extra funding; six of eight Cumberland County districts, five of 10 Dauphin County districts, four of six Lebanon County districts, 13 of 16 Lancaster County districts, 15 of 16 York County districts.

What Stephens sees as a potential windfall for school and local taxpayers, the horse industry sees as a death sentence.

"It's gone," said Todd Mostoller, Executive Director of the state Horseman's Benevolent & Protective Association. "(If it passes) there is no industry in Pennsylvania."

Horse racing has a $4 billion economic impact in Pennsylvania, Mosteller said. It has grown -- back by money from slots machines -- even through the recession. A lot of those are agricultural jobs.

At the news conference announcing the bill, Stephens read from an article in a trade magazine quoting a New Freedom owner criticizing how the fund is currently structured, since some of the winning horses come from out of state. Mostoller called than an opinion, contradicted by reports on the industry.

While a large percentage of the development fund does go to purses, Mosteller said it also pays for healthcare coverage and incentives breeders to work in Pennsylvania.

"I'd hate to see people who invested hundreds of millions of dollars then to have the rug pulled out from under them," Mostoller said.

Stephens bill wouldn't eliminate the development fund, but it would practically end its impact on horse racing. Under the bill, any slots money for the fund after $250 million would go to the racing industry, but that would be a few million, at best.

The most the fund ever received in one year was $263 million. Slots revenue in the state declined for the first time this year, and the experience of other states suggests Pennsylvania won't see another spike. Stephens estimated the fund will have about $245 million this fiscal year, which wouldn't meet his stated goal for funding schools.

Since slots were legalized in 2006, the legislature has dipped into the development fund to pay for a variety of things. 

Stephens and other representatives who spoke Monday seemed to think they'd have the public on their side.

"When faced with policy decisions, I'll choose my constituents over gaming revenue or the horsemen any day of the week," said Rep. Seth Grove, R-Dover.

Stephens said he sent the legislation to Gov. Tom Corbett's budget office this week, but has not yet heard back. Corbett will deliver his budget address Tuesday

Stephens introduces his bill at a time when other measures before the legislature would address property taxes and the state's school funding formula. When asked if this means those initiatives won't receive enough support to pass, Stephens replied that his bill wouldn't impede either property tax reform or a proposed school funding study.

"This is a more immediate way to address some of these issues," Stephens said. "I want to make it clear, this is not a solution to the whole problem. This is just a step towards a solution. There's still a lot of other work that needs to be done."

by Jeff Franz for the Patriot News, reprinted with permission from www.pennlive.com

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