01/20/2010 12:00AM

Ky. governor's budget plan includes slots


Kentucky Gov. Steve Beshear on Tuesday night introduced a two-year budget that includes $780 million in projected revenues from slot machines at state racetracks to help close an estimated $1.4 billion deficit.

Beshear, a Democrat who has already begun raising funds for his 2011 re-election campaign, included the slot-machine revenues in the budget despite opposition from many state Republicans and doubts within his own party that a gambling bill can pass this year. Beshear has lobbied heavily for slot-machine gambling at racetracks since taking office in 2008, with support from other Democrats and the racing industry.

By including the slot-machine revenues in his proposed budget, Beshear is putting pressure on lawmakers opposed to the legalization of casino gambling. If the legislators do not support his proposal, they will have to turn toward other ways of raising money or cutting spending, most of which are politically unpopular, such as tax increases.

In addition, Beshear's continuing support of a plan that could generate hundreds of millions of dollars a year for racetracks and horsemen is likely to further burnish his image among the state's racing industry, a group that has traditionally leaned to the right but has begun drifting toward Democrats because of their unflinching support of slots. As a result, the state's Democratic Party is now reaping a financial windfall from the racing industry.

In an address accompanying the release of the budget, Beshear said that without the contribution from revenues from slot machines, the government would have to cut its budget 12 percent in fiscal year 2010-11 and 34 percent in 2011-12. Those estimates, of course, ignore any other measures the state government might adopt to raise revenue or cut spending.

Passage of a gambling bill has been seen as extremely unlikely this year for a mix of reasons. So far, Senate Republicans remain unsupportive of any proposal that does not include putting the issue to a public vote, while Democrats and the racing industry remain locked on to a legislative solution. In addition, the 2011 elections will discourage incumbents from taking any positions that might weaken support in their home districts.

The racing industry in Kentucky has spent millions of dollars over the past several years funding advertising efforts to generate support for slot machines in Kentucky and for candidates that favor the legalization of the machines. Those efforts, so far, have not been successful in getting legislation that could pass both houses of the legislature. The Assembly is controlled by Democrats, and the Senate is controlled by Republicans.

Several racing officials involved in the industry's lobbying efforts said that Beshear's support for slot machines in the budget had to be viewed in the context of the political situation in Kentucky, and not as a significant shift in support or opposition to the proposal.

Patrick Neely, executive director of the Kentucky Equine Education Project, a lobbying organization funded by horse racing interests, said that the racing industry would continue to press lobbyists this year to support slot machines at racetracks.

"We'll continue making our case in Frankfort," Neely said. "Our industry continues to face a serious competitive crisis."

Damon Thayer, a Republican senator who has introduced a bill that would ask voters to approve slot machines, called Beshear's inclusion of slot-machine revenues "irresponsible" and said that the legislature would have other options to close the budget deficit.

"It was a pretty cynical ploy," Thayer said. "It misleads the people of Kentucky and provides false hope to the racing industry that there is support for their bill, when there isn't."