N.Y. Struggles With Purse Surcharge

New York Legislature disagree on how to raise funds

Legislative budget negotiators in New York agree they want to eliminate or reduce a proposed surcharge on purses, but they can’t resolve how they want to make up the difference in revenues the plan needs to bring to the budget.

“We don’t believe that the answer to promote racing is more taxes and fees on the horsemen,” said Senate Racing Committee Chairman John Bonacic.

But the Assembly and Senate, in what could be the final couple weeks of state budget talks before the next fiscal year starts April 1, are still apart in how to eliminate a 2.75 percent surcharge on purses proposed by Gov. Andrew M. Cuomo. The surcharge would bring in about $7 million and go towards funding the state racing and wagering board’s operations.

Assemblyman Gary Pretlow, chairman of the Assembly racing committee, said the Senate is still holding out for its plan to put out to private bid the business of the now-closed New York City Off-Track Betting Corp. Senate Republicans also want to reduce certain statutory payments for the state’s off track betting corporations.

“We’re not doing that,’’ Pretlow said of the Senate’s OTB plans.

The Assembly Democrats, meanwhile, want to lower Cuomo’s proposed purse surcharge and replace the lost revenue by imposing a fee on racino operators. The Senate has instead offered what Bonacic called a “general assessment” on all racetracks in the state.

“We are going to look to do a general assessment to spread it out broadly and not hurt the horsemen or the breeders,” the senator said.

Bonacic said the Senate still wants a privatization plan for NYCOTB, which closed in December after the Senate failed to back a Chapter 9 bankruptcy reorganization plan for the onetime betting giant. The Senate plan, critics say, does not include paying off NYCOTB’s former creditors, and still leaves the state in control of a reconstituted NYCOTB.

“We believe there are structural problems in racing and we have to attack them,” Bonacic said. He said a broader plan needs to be considered to examine the fiscal problems facing the tracks and OTBs as well as Senate-proposed ways to beef up fan interest in attending races.

“You have to take an overview of the whole industry to try to come up with reforms now that are meaningful. We have windows of opportunity to do that,” the senator said.

Pretlow said the Senate is uninterested in the Assembly plan for a fee on racino vendors. “I still don’t think that the tax on purses is fair, and our position is we don’t do that,” Pretlow said.

While a broader plan might be an objective, lawmakers are facing a clock: the push is on to get an on-time budget by March 31, and items in other policy areas are already dropping off the negotiating table as the sides try to prioritize what has to be done now versus later in the legislative session.

The differences in the Legislature come after the second OTB in less than two years – this time Suffolk Regional OTB – filed for Chapter 9 bankruptcy protection.

Suffolk sought its reorganization protection last week in federal bankruptcy court. In its court petition, the OTB listed the New York Racing Association – at $1.7 million – as its top creditor. NYRA was also number one on the now-closed NYCOTB bankruptcy petition.

The Suffolk OTB’s other major creditors include $1 million for future pension payments for its workforce, $909,000 to Yonkers Raceway, $410,000 to Finger Lakes Racetrack, $385,000 for employee benefits, and $353,000 to Monticello Raceway.