KENTUCKY (1/19/14) - Lots of ideas are being floated this legislative session about how we lawmakers can best address an expected shortfall (of at least $370 million) in the state’s General Fund over the next two years. Tax reform, additional budget reductions, and authorization of casino gaming at racetracks and a few off-track sites are among them.
And while legislation filed in the current legislative session addressing those topics has yet to be called for a vote in committee, two casino gaming bills were heard by the House Licensing and Occupations Committee last Wednesday.
One of the bills (House Bill 67) would place a constitutional amendment on statewide ballot allowing voters to decide whether to permit casinos in Kentucky; the other (HB 68) is so-called “enabling legislation” that would set up the structure for governance of eight full-service casinos and the collection—and spending—of at least $245 million in annual state revenues that those casinos are expected to earn.
Now, there is at least one other piece of casino legislation pending in the Senate that is sponsored by Senate leadership, so any legislation heard by lawmakers at this point in the session is likely to be amended to make it amenable to both chambers. That said, HB 68 clearly sets out rules for licensing, taxation and fees for the eight casinos—including five “racing association casinos” connected to the state’s five thoroughbred race tracks and three non-racing casinos to be located in counties bordering another state.
The eight casinos, according to a legislative fiscal note, are expected to generate a total of around $830 million in adjusted gross revenue when fully operational. That revenue, in turn, would generate an estimated $245 million in annual state revenue -- in addition to around $400 million in initial casino license fees based on a $50 million initial license fee required of each of the eight casinos.
How revenue generated by the casinos would be used is clearly spelled out as well: funding of the Kentucky Gaming Commission--created by HB 68 to regulate the new casinos--and $2 million for the state compulsive gamblers assistance account would come off the top of funds in the gaming account. Remaining dollars in the account would be transferred to the General Fund. Of money in that fund, 50 percent would go toward education; 10 percent would go to the state public pension stabilization fund; four percent would go toward substance abuse treatment; and 25 percent would go toward other purposes determined by legislation.
For the horse industry, casinos would set aside specific amounts of their receipts to boost track purses and fund capital improvement to “backside” racing facilities, while thoroughbred and standardbred racing casinos would be required to pay around 14.3 percent of adjusted gaming receipts for increased purses, breeder incentives, racehorse retirement efforts, and other needs.
Many say this is the year to pass the legislation, although there are different ideas in the House and Senate on how to go about wording the amendment and drafting related legislation. I am sure we will all be watching closely to see how the legislation—and issue, in general—evolves during this 2014 Regular Session.
Many bills began to make their way through committees last week, and we saw passage of a few bills on the floor of the House. One of those was HB 66, which would allow the creation of public benefit corporations in Kentucky. Commonly called “B Corps,” public benefit corporations often require a corporation to state a specific public benefit in their charter. HB 66 is modeled after Delaware’s B Corps law which is designed to use the power of private enterprise for a public purpose. HB 66 passed the House by a vote of 58-34 and now goes to the Senate for a vote.
Also passed by the House and on its way to the Senate is HB 70, a perennial House measure that would allow Kentucky voters to decide by constitutional amendment whether or not to automatically restore voting rights for nonviolent felons who have served their sentence or completed probation or parole. HB 70 passed the House by a vote of 82-12 with bipartisan support, and is expected to come to a vote in the Senate in coming days.
Let me return now to the state budget: this session is what we lawmakers call a “budget session” because it requires us to pass a state spending plan for the next two years. Our budget review subcommittees will soon begin hearing from state agencies and others concerning their financial needs for the next two years. We will also hear from the Governor on Tuesday, Jan. 21 when he explains the state’s biennial budget needs in his planned budget address.
There will be much to talk about on this subject, other more, as the session progresses. So be sure and stay in touch, and stay informed.
Rep. Brent Yonts
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