State budget: A day at the races

WE INTERRUPT the $3.2 billion state budget crisis to offer a few suggestions before Gov. Rendell gets too comfortable with the idea of raising the income tax.

Unlike Mayor Nutter and his Cabinet, who have spent months explaining the budget crisis to citizens, neither the governor nor the Legislature has offered much in the way of explanation for how exactly the hole reached $3 billion. Sure, the economic downturn has rocked most government budgets. But unlike the city, the state has benefited from two big streams of dollars.

The first is $1 billion-plus in federal recovery money. Granted, there are restrictions on how some of it can be spent. But a billion dollars is nothing to sneeze at, even though the state seems about to sneeze at accepting $273 million of it for employment compensation.

The second stream of money is more like an river: $3 billion in direct revenues from the state's gaming industry, expanded to include slots parlors in 2004. As outlined by Act 71, the revenues get distributed into four pots: property-tax relief for Pennsylvanians ($1.2 billion to date); funds for municipalities to share costs of gaming ($139 million to date); tourism ($174 million), and the rest to something called the Race Horse Development Fund ($419 million to date).

The race-horse fund is designed to revive the state's race-horse industry, which was the whole point of Act 71 - also known as the Race Horse Development & Gaming Act. Most of that money has gone to increasing the purses for horse races.

If you're one of the 3,000 owners/operators of a race horse in the state, or holder of one of 10,000 related jobs, saving the state's horse-racing industry is important. If you're someone who likes to bet on horse races in your home state, growing the industry is convenient.

But if you're a child whose Head Start funding is about to be cut . . . or a parent who has kids in public schools . . . or a senior citizen facing cuts in health-care coverage, all of which the Senate-proposed budget would affect, maybe it's time to be a little less generous to the horse-racing industry.

We're not suggesting the industry's not important and doesn't deserve a piece of the gaming revenues. Though we can't help being struck by the irony - irony is the least-offensive word we can conjure to describe it - that the expansion of gambling in the state was designed to save another form of gambling: betting on horses.

Considering the community strife that slots parlors have brought to this city alone, and the social costs of gaming that many opponents decry, the idea that it's all designed to fatten the winnings of horse races - and not to benefit the greater good - is questionable in the extreme.

Yesterday, Rendell asked for cuts in the government to bring spending down, and is also pushing for a tax on smokeless tobacco and on natural-gas extraction. It's still not enough. He says there are no other options but to raise income taxes.

While the Legislature is in session, maybe someone should pass a law that adjusts the percentages of where the state's gaming revenues go. At the very least, allocation should be flexible enough to help the state meet economic downturns without making everyone suffer.

The original Act 71 is ripe for reform, anyway: State House majority whip Bill DeWeese has been pushing to add table games like blackjack and craps to the gaming lineup. That will change the stakes yet again.

If the state insists on increasing its vice-based revenue streams, let's make sure that everyone benefits.

Those big pots of gaming money should not be reserved for any sacred cows . . . or horses. *