New York Lawmakers Approve NYRA Loan
New York State lawmakers on May 24 approved a $25 million loan for the New York Racing Association, keeping the racetrack operator solvent for at least the rest of the year and avoiding a threatened shutdown of its operations after the June 5 Belmont Stakes (gr. I).
The governor earlier in the day had proposed a separate loan bill for NYRA, but changed course later in the afternoon and inserted the borrowing into a broader, emergency appropriations bill to keep the government running absent a 2010 budget in place. The route forced lawmakers who might have been reluctant to approve the NYRA borrowing to go along with the measure or force a government shutdown.
“It’s more than just jockeys on a horse going around a track. There’s an entire, multibillion industry of racing in New York that not only New Yorkers depend on but people outside the state as well,’’ Sen. Eric Adams, chairman of the Senate racing committee, said of the NYRA financing.
Under terms of the deal, NYRA must repay the loan by next March 31, which is within the state’s 2010 fiscal year.
The NYRA borrowing has taken a series of twists to get to its approval. Originally, it was part of a bailout plan for New York City Off-Track Betting Corp., a measure that died. Then it became a “stand-alone’’ bill proposed by Paterson, which called for giving NYRA a $17 million state loan against its past and future capital expenditures; that idea was rejected as an illegal use of bonding for operating purposes.
The governor then made the plan a straight borrowing by the state’s economic development agency. But the bill would have forced lawmakers to back a borrowing for a gambling enterprise at a time when a whole range of popular programs are facing the budget ax in a state with a $9.2 billion budget deficit. Paterson then late this afternoon put the borrowing into the emergency budget appropriations measure.
The governor last week said he would propose a borrowing plan, which aides described as enough money to keep NYRA afloat until at least next spring.
NYRA has said it will run out of money in June, and last week it sent 60-day layoff warning notices to its 1,300 employees.
The new borrowing idea lowers to $225 million from $250 million an appropriation previously approved for the Aqueduct working capital plan to be used by a future operator of the casino. The Paterson administration hopes to award a new agreement for the long-stalled casino sometime in early August.
NYRA officials have argued the state is not bailing out the racing giant because the New York City Off-Track Betting Corp., which is owned by the state, owes NYRA $17 million. They further argued the state promised to have the Aqueduct casino open by last year; if not, the state agreed, when it awarded NYRA a new franchise in 2008, to provide financial help if NYRA’s fiscal condition turned bad.
“Enactment will provide a bridge until VLT revenues are in place to fund NYRA’s operating and capital expenses,’’ a memo accompanying the NYRA borrowing states. “The legislation holds the state harmless by providing that NYRA will pay back the state.” It added that NYRA’s Saratoga summer meet would not happen without the loan.
If NYRA does not pay back the loan by the end of next March, the state will take proceeds from the future casino operator – from money destined to NYRA as part of a revenue sharing deal – until the $25 million is repaid.
“Absent enactment of this bill, NYRA will not have enough cash to continue the racing season at Belmont beyond the Belmont Stakes, and the Saratoga racing season would be cancelled,’’ the bill memo states.
The Assembly’s top Democrat backed the NYRA loan. “I think one crisis in the industry is enough. It’s a loan against something that’s clearly a recognized commodity that will easily be paid back,’’ said Assembly Speaker Sheldon Silver.
Assemblyman Gary Pretlow, chairman of the Assembly racing committee, said the measure could go to the floor for passage as soon as this afternoon. “I would hope it does,’’ Pretlow said when asked for its chances for passage.
Pretlow said NYRA would not be in the fiscal condition it faces were it not for the state’s failure to open the Aqueduct casino and the lapsed payments by NYCOTB. “We never should have gotten to this point,’’ he said. Pretlow was critical of what he called the “still bloated’’ management at NYCOTB that don’t “want to pay their bills.’’
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