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Statehouse Beat: Budget cuts that take guts

CHARLESTON, W.Va. -- As legislators prepare to close a $300 million gap in the state's 2013-14 budget, I can show them where they could find an extra $100 million a year of revenue -- if they had the guts to pull the trigger.

For the just-completed 2011-12 budget year, the Lottery transferred $106,580,235 to the state thoroughbred and greyhound purse and development funds.

That's no typo. That's $106.58 million to subsidize the horse and dog racing industries in the state.

For thoroughbreds, that included $69.66 million of revenue from racetrack video lottery and $10.16 million from table games.

Greyhounds got $24.99 million from racetrack video lottery, and $1.75 million from table games.

At some point, the Legislature will have to decide whether to continue to subsidize these not-entirely-savory industries to the tune of 50 cents on the dollar, or put taxpayer dollars to better use.

That's particularly true as competition from bigger, glitzier casinos closer to major population centers in three neighboring states puts the squeeze on West Virginia's racetrack casinos.

It is doubtful that Mountaineer Casino in little, out-of-the-way Chester can survive long-term, and if Wheeling Island survives, it will be as a greatly diminished operation catering to locals. Likewise, Nitro's Mardi Gras Casino will feel the hit when competition opens and expands in Columbus, Ohio, this fall.

Only Charles Town looks positioned to survive the onslaught intact, with its top-shelf facilities, proximity to metro D.C., and with no plans currently for a Maryland gaming facility that would present direct competition for gambling dollars.

It always surprises me that the public can get worked up over a proposed $20 million a year subsidy to get Century Aluminum reopened, or a one-time "Brewster's Millions" style spending spree of $23 million in federal stimulus funds, but isn't outraged over the state's subsidy to date of $1.2 billion (that's billion with a "B") of the horse and dog racing interests.

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Speaking of the budget deficit, Republican gubernatorial candidate Bill Maloney continues to display a disturbing lack of understanding about state government, despite being into his second year now running for governor.

In a press release, Maloney seems to suggest that the budget deficit suddenly materialized on Gov. Earl Ray Tomblin's watch, stating, "Even Earl Ray's own budget memo can't hide the facts of his failed record as the budget dives toward a deficit."

Which is a nice sound bite, until you look at the facts.

In fact, ever since then-Gov. Joe Manchin instituted six-year budget forecasts as part of the state budget process in 2005, the deficits have been looming in the out years -- and for the same reason as the 2014 deficit: soaring health-care costs.

Then-public policy director Brian Kastick warned in 2006 that Medicaid costs were unsustainable -- and that was before federal Medicaid funding dropped from a 4-to-1 match to 3-to-1):

"A $2 billion program growing at a 12 percent rate will just eat you alive," Kastick said of the pending Medicaid funding crisis.

At the time, the concern was the deficit would hit as early as 2008, but growth in the state economy and prudent state spending ended up buying the state an extra six years in the black.

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Meanwhile, Ted Boettner with the West Virginia Center on Budget and Policy notes that much of the 2014 deficit is self-inflicted, from cuts in corporate net and business franchise taxes ($120 million), the phase-out of the sales tax on food ($156 million), and elimination of the estate tax ($18 million), accounting for $294 million in lost revenue.

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Regarding last week's item about attendance at the Southern Legislative Conference appeared to be half that of the last time Charleston hosted the SLC in 1997, official figures show it was actually even worse.

According to SLC staff, a total of 540 participants (including legislators, staff, spouses and family) registered for the four-day event, and a total of 500 actually checked in.

Meanwhile, a couple of corrections/clarifications from last week:

Regarding SLC sponsorships, it was the state Racing Association (the horseracing lobby), and not the state Racing Commission that was one of the $10,000 sponsors.

Also, James Muhammad, director of radio services for West Virginia Public Broadcasting, said he did not attend the meeting where Education and Arts Secretary Kay Goodwin raised issues about the lack of storm recovery coverage on public radio following the June 29 derecho.

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Finally, as a person who generally completes his Christmas card list during the week between Christmas and New Year's, and more often than not sends belated birthday cards to family and friends, it may take me a while to respond to all the cards, e-mails and kind words I've received regarding my mother's death, but be assured, I appreciate all the kind thoughts and comments, and will try to get caught up eventually.

Reach Phil Kabler at philk@wvgazette.com or 304-348-1220.

 


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