Horse Breeders or Kids?

A recent Examiner article on a proposal by Delegate Luiz Simmons (D-17) to strip a $100 million subsidy from slots to the horse-racing industry raises an interesting question: should slots money go to horse breeders or kids?

Delegate Simmons, perhaps second only to Comptroller Peter Franchot in his fire-breathing opposition to slots, believes that slots money should not be given to the horse-racing industry in a time of billion-dollar state budget deficits. He tells the Examiner, “I can’t stomach giving $100 million each year to bail out a dying business.” Simmons would rather use the money for education, health care and transportation.

Shaun Adamec, a spokesman for Governor Martin O’Malley, responded, “Slots, including the revenue generated by them, is an issue that has been debated for many years, and was ultimately decided by the voters in November.” Adamec’s implication is that Marylanders voted to give the horse racing industry $100 million a year. That, of course, is dead wrong.

HB 4 of the Special Session, which was the constitutional amendment providing for slots, authorizes them for “the primary purpose” of funding prekindergarten through 12th grade education as well as public school and higher education capital projects. It says nothing about horse racing. Neither does the actual ballot language, which only mentions education. Horse racing and other uses of slots money appear in SB 3, the authorizing bill, which was approved by the legislature but not by the voters.

It turns out that education, which is after all the “primary purpose” for slot machines, could be a casualty of the state’s budget crisis. In a recent Gazette article, Senate President Mike Miller said, “I don't intend to support any cuts in education,” but pointedly excluded teacher pensions and the Geographic Cost of Education Index (GCEI) from his definition of cuts. We have discussed teacher pensions before, but the GCEI issue warrants further discussion.

GCEI was part of the 2002 Thornton plan that authorized billions of dollars in new state spending on education aid. The purpose of GCEI was to steer additional aid to jurisdictions where the cost of education was particularly expensive. Former Governor Bob Ehrlich never funded GCEI, but Governor Martin O’Malley initiated a partial phase-in during the special session. The largest recipients of GCEI aid in this fiscal year are Prince George’s County ($23.6 million), Montgomery County ($18.4 million) and Baltimore City ($13.0 million). Thirteen of Maryland’s twenty-four jurisdictions receive at least some GCEI funding and the total amount this year is $75.8 million. (See page 16 of this document for the full distribution.)

In the aftermath of the recent cost-of-living concessions by Montgomery County’s school unions, I asked one of my labor friends what would happen if GCEI were eliminated. “We’ve given everything up,” my source told me. “It would go straight to the classrooms.” That is a calamitous scenario that few politicians would willingly embrace. But according to the Post, the state may now eliminate at least half of this funding.

While slots money will not be available in time for this year’s state budget, it will be rolling in soon enough. If GCEI is zeroed out this year, it may never come back. But if slots money is re-allocated away from the horse industry and towards education – which is of course the “primary purpose” for slot machines – then GCEI could be restored. So this creates one very important question for our state legislators:

Who’s more important? Horse breeders or kids?