To help with the state budget crisis, a state legislator has proposed putting a cap of $4.5 million on annual revenues that Scarborough Downs and the rest of the harness racing industry glean from Hollywood Slots.

Rep. Linda Valentino, D-Saco, said the cap on the money that the racing industry receives from the Bangor slots facility would extend for three years. She said the proposal is only fair because legislators last year approved a similar, three-year cap of $4.5 million on the slot revenues received by the Fund for a Healthy Maine to buy prescription drugs for the elderly and disabled.

However, Scarborough Downs opposes the proposal, saying it would harm the already struggling harness racing industry.

A cap on the racino funds would be the second setback to Scarborough Downs in a little over a year. Scarborough voters shot down 5,797 to 5,557 a proposal in November 2008 to allow slots at the horse track. Following the election, Downs officials said they were exploring ways to move the facility.

“Those racino funds are crucial to harness racing, including this racetrack until the racetrack has gaming machines of its own,” said Edward MacColl, the attorney and spokesman for Scarborough Downs. “Any reduction in those funds could be devastating.”

Valentino said her proposal on capping racino revenues to harness racing would generate an extra $1.8 million this year for the state’s general fund to use for social service programs. Additional revenues would be realized in the following two years of the cap, she said.

Valentino contends the industry gets plenty of racino money. “Why should we have one industry that we have more than stabilized?” she said. “I don’t think the public understands how much revenue one industry is getting from the slot machines.”

Valentino’s proposal comes as lawmakers in Augusta struggle to close a state budget shortfall of about $400 million. She is a member of the Legislature’s Legal and Veterans Affairs Committee, which has jurisdiction over gambling in Maine.

That committee was expected by the middle of this week to vote on budget recommendations to send to the Appropriations and Financial Affairs Committee. The vote was expected to take place mid-week, after The Current’s deadline.

It was not clear how Valentino’s proposal would fare. She said that when she proposed it last week, some committee members liked it but others were opposed, and most wanted more information. “I’m not sure what the prospects will be coming out of committee,” she said.

When voters in 2003 approved having a slots facility in Maine, the new law divvied up the revenues in a complicated formula. Some of the proceeds go into a so-called “cascade” fund. The Fund for a Healthy Maine is one of the entities that benefit from the cascade fund. The money is used to buy prescription drugs for the elderly and disabled. The harness racing industry also gets some cascade revenues.

Valentino said she made her proposal in an effort to address the state budget crisis in a fair manner.

“My thinking was if we capped one entity under cascade, why wouldn’t we cap everything under the cascade? Why pick on prescription drugs for the elderly?” she said.

Valentino said the cap on the Fund for a Healthy Maine is a reduction of 9.7 percent of the revenues that would have gone to the prescription drug program. The cap she is proposing for the harness racing industry would result in the same percentage reduction, she said.

She said the 9.7 percent figure is similar to the 10 percent cut in spending that all state departments and agencies are being asked to make in order to balance the budget.

“So many people have been asked to sacrifice and everyone should be doing their part. We shouldn’t be letting one group off the hook,” Valentino said.

The money would go to social service agencies, which have been “dramatically cut” in the state budget, she said.

However, MacColl said, “Really, what is being proposed is an additional 9 percent tax on the harness racing industry.”

The industry includes two commercial tracks – Scarborough Downs and Bangor Raceway – and racing at various fairgrounds throughout Maine.

MacColl said, “The tracks are losing money on racing even with that (racino) subsidy.”

At Scarborough Downs, he said, the business loses more than $10,000 each time it holds a live race day. The track has more than 100 live race days each year, he said.

MacColl said that the racino money Valentino wants to cap is “the lifeblood of support to the harness racing industry.”

He also contends that the revenues are “the (harness racing) operators’ share, not the state’s share.”

That is part of the state law regarding the racino, he said. “This is a revenue-sharing program the industry agreed to in the law so we would all know it was coming and could count on it,” MacColl said.

But Valentino said voters also agreed that part of the proceeds would be used to lower prescription drug costs for the elderly and the disabled.

“This proposal keeps with the intent of the voters when they voted on Nov. 4, 2003,” she said in the written version of the Jan. 27 proposal she submitted to the Legal and Veterans Affairs Committee.

“The horsemen cannot tell me this is their money. This is money that is allocated in statute and we have every right to cap it,” Valentino said.

It was not clear exactly how much in actual dollars Scarborough Downs would lose annually if racino revenues were capped.

MacColl said he did not have specific figures immediately at hand on Scarborough Downs’ operating budget and its yearly share of racino funds.

However, one legislator, Rep. Sean Flaherty, D-Scarborough, said Scarborough Downs would be down less than $200,000.

Flaherty, who is not a member of the Legal and Veteran Affairs Committee, said last week that he has not yet reached any conclusions about the proposal.

“This is something I am still understanding and learning about,” Flaherty said. “We’ve got to make sure there are no unintended consequences (if the proposal is passed).”

A proposal to help balance the budget from a Saco legislator would hurt the harness racing industry, a Scarborough Downs spokesman said this week.
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