WHEELING - A proposal by Gov. Earl Ray Tomblin to help balance West Virginia's budget would reduce subsidies for the state's horse and dog racing industries, but also cut the share of gambling revenue sent back to cities and counties.
The legislation provides for about $39 million in annual cuts to lottery revenue spending for the next three years, and about $19 million each year thereafter. It would reduce a statutorily required contribution to the state Infrastructure Fund from $40 million to $20 million through mid-2017, and cut by 15 percent annual distributions of gambling proceeds to city and county governments, as well as dog and horse racing purses and "development funds."
Similar measures to accomplish those goals were proposed this week in both houses of the Legislature.
According to state Revenue Secretary Bob Kiss, the measure will help fill a $146 million gap in West Virginia's 2014-15 budget and - more importantly, he believes - help preserve investor confidence in state bonds backed by lottery proceeds, even as competition from neighboring states pulls customers away from Mountain State casinos.
"At the end of the day, I think this legislation is far more about the state's ability to incur debt in its lottery fund. ... We don't want to go backwards. We want to continue to support a top-level bond rating," Kiss said.
Local governments throughout the Mountain State benefit from a portion of tax revenue collected from various legalized gambling operations, including racetrack video lottery, limited video lottery and table gambling. Cities and counties where such activity occurs receive a larger share of the take.
The proposed legislation would reduce those payments by 15 percent. That could mean headaches at budget time for communities around the Northern Panhandle, which is home to two full-scale casinos: Wheeling Island Hotel-Casino-Racetrack and Mountaineer Casino, Racetrack and Resort.
Kiss said state agencies have been forced to absorb 7.5-percent budget cuts for consecutive years, noting "maybe it's time to spread that pain."
"I'm not suggesting it's going to be easy," Kiss said. "We know it's going to create some difficulties at the local level."
Ohio County Commissioner Orphy Klempa - a former state senator - said he understands the difficulties state government is facing in balancing its budget. But, as he believes proponents of the cuts are quick to forget, a major selling point for the expansion of legalized gambling was a pledge that cities and counties would reap the benefits.
"I think that's money that was promised to the people of Ohio County. ... That money goes to a lot of important places in Ohio County. I don't like to see promises broken," Klempa said.
Wheeling City Manager Robert Herron said he has not read the proposed legislation, but the city would "vigorously oppose" any reduction in the distribution of gambling revenue to cities and counties.
"Our budget is very tight right now," Herron said. "It is balanced, and we rely upon all of our revenue sources to do that."
Kiss declined to predict the likelihood of the governor's legislation being enacted.
"I hope that those who come forward and oppose it have some responsible resolution of the issues I've pointed out," he said.
State Senate President Jeff Kessler, D-Glen Dale, is still reviewing the governor's bill with his staff and is not yet ready to comment on it, according to spokeswoman Lynette Maselli.