ANNAPOLIS A top aide to Republican Gov. Robert L. Ehrlich Jr. yesterday confirmed that the administration is looking to cut the amount of education funding in its slots bill to increase profit for horse-track owners.
The bill originally earmarked about 64 percent of the slot-machine revenue for public schools and gave the track owners 24 percent. Annual proceeds from a total of 10,500 slot machines at four horse tracks are estimated to exceed $1 billion.
The track owners Magna Entertainment Corp. and the DeFrancis family at Pimlico and Laurel, Centaur Inc. at Rosecroft, and Delaware slots mogul William Rickman Jr. at the planned Little Orleans near Cumberland complained that the profit margin was too thin to offset the nearly $300 million investment to open each slots casino.
The track owners say they need about 40 percent of the take from slot machines to make the venture profitable.
Finance consultants working with Budget Secretary James C. DiPaula Jr. also will look at increasing the 3 percent going to local governments hosting the tracks and the 1.4 percent going to an incentive fund for Maryland-bred horses running in Maryland races. Any change would likely impact education funding.
“There is a likelihood that those numbers will change. How much is the question,” said Paul Schurick, the governor’s communications director.
He said they would not change other major provisions of the bill, such as the number of slot machines and the number and location of tracks authorized to have slots. He also said that changing the split of slots booty will not dim the odds for passing the bill, which the administration insists has a majority of support in both chambers of the Democrat-controlled General Assembly.
“I’ve never felt more confident about this bill than I have this week,” Mr. Schurick said. “We are starting to see the way this bill is going to pass. It is not short and it is not easy, but we see the path we are going to take.”
Mr. DiPaula has posted a request for proposals on the department’s Web site, seeking a consultant to analyze the finances involved in the slots bill.
The analysis, due Feb. 21, will detail the feasibility of proposed slots casinos based on a review of operating costs, capital-construction investment, debt financing and cash flow from operations. The consultant also must perform a financial analysis of any alternative slots bills by legislators, according to the notice.
They expect to hire the consultant by Feb. 18.
The slots bill is a centerpiece of Mr. Ehrlich’s fiscal 2004 budget, supplying $395 million in licensing fees and gambling proceeds to help close a $1.3 billion budget deficit without raising taxes or forcing layoffs. Slot revenue would also contribute about $600 million to the fiscal 2005 budget, according to the administration.
House Minority Leader Alfred W. Redmer, Baltimore County Republican, said yesterday that he had commitments from more than 30 of the 43 House Republicans, the supermajority of the caucus that some Democratic leaders demanded before lending support to the governor’s bill.
Mr. Redmer said reducing the cut for education would not turn lawmakers against the bill. Public schools stand to gain a dedicated and reliable funding stream whether receiving, for example, $650 million or $500 million a year. It was more important that bill not appear as a sweetheart deal for track owners, he said.
“We don’t want to create a windfall for the operators of the tracks,” he said. “It has to be enough to work for track owners but it is not a track owners’ retirement plan.”
House Speaker Michael E. Busch, a chief opponent of Mr. Ehrlich’s slots bill, disagreed. He said lawmakers would have a tough time explaining any cut to the education funding in favor of track owners.
“It is very hard for Maryland citizens to understand how you are going to give racetracks and the horse industry more money while you are cutting funding for educating kids,” said Mr. Busch, Annapolis Democrat.