Kentucky Gov. Steve Beshear

Kentucky Gov. Steve Beshear

Anne M. Eberhardt

Beshear Budget Calls for Racetrack Gaming

Kentucky's governor presented a budget that relies on revenue from racetrack gaming.

Democratic Kentucky Gov. Steve Beshear called the state legislature’s bluff Jan. 19 by presenting a two-year budget that relies on more than $700 million in revenue from gaming machines at racetracks.

Beshear basically put the ball in the court of the General Assembly—approve the plan or find other ways, such as raising taxes or making cuts, to balance the budget. The issue of expanded gambling has been debated in Kentucky since 1994, with no substantive action.

A bill narrowly passed the House of Representatives in 2009, only to die in a Senate committee. Beshear has said expanded gambling at racetracks can help balance the budget and aid the horse industry in Kentucky.

Beshear didn’t mention the horse industry in his address. He instead said not passing a gambling bill would force budget cuts of 12% in fiscal year 2010-11 and 34% in fiscal year 2011-12.

“We must not hide from difficult decisions and we must not hide from our duty,” Beshear told members of the General Assembly.

Beshear offered no details of his gaming plan, except to say the state’s share of revenue would go to the general fund to help support programs. Legislation to authorize racetrack video lottery terminals was introduced Jan. 19 by Democratic Sen. Ed Worley.

Beshear offered four options: spending cuts of 12%-34%; waiting for federal stimulus money that may or may not come; a broad-based tax increase; and use of revenue from expanded gambling to help balance the budget, which is expected to be about $1.4 billion short.

The move is politically risky, though not without precedent. After Beshear’s address, Democratic House Speaker Greg Stumbo said the legislature needs to see if the plan is workable.

“I hope he has done his homework,” Stumbo said in reference to gauging support for expanded gambling. “We wish him the best.”

Republican Senate President David Williams, who opposes expanded gambling, called it “essentially a weak speech.” He said Beshear “abdicated his role” to the state legislature in regard to offering a two-year budget.

Williams also said such revenue-generating measures must start in the House, not the Senate, leading him to believe Worley’s bill is a “political ploy.” Worley's bill, however, merely deals with authorizing the Kentucky Lottery Corp. to operate VLTs at tracks; it contains no revenue splits.

Beshear acknowledged his support for racetrack gaming, which has become a political football in Kentucky. This year has been no different, with a game of cat-and-mouse between Democrats and Republicans in advance of a November election when half of the 120 legislative seats in the state will be up for grabs.

Horse industry representatives have said help is needed immediately in order to bolster purses and breed development funds.

Legislation calling for a constitutional amendment on racetrack gaming was introduced but hasn't been heard in a Senate committee. Republican Sen. Damon Thayer said he hoped the measure would gain support.

Meanwhile, a Williams-introduced bill calling for a constitutional amendment on any expansion of gambling was added to the Jan. 20 agenda of the Senate Committee on Local and State Government. It had been pulled from that committee's agenda a week earlier; Beshear's plan wasn't known at the time.