Baldacci: Racino in lawmakers’ hands Governor gave other tax options for budget

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BANGOR – Gov. John Baldacci sidestepped questions Wednesday about the potential fallout from Penn National Gaming Inc.’s decision this week to halt work at the site of the $131 million gaming and racing complex it planned to build across Main Street from Bass Park.

Penn National, the parent company of Hollywood Slots at Bangor, pulled construction workers off the job site on Tuesday in response to a legislative proposal to increase the state’s share of revenues from the company’s slot machines. Penn National currently operates 475 slots out of its interim facility in the former Miller’s Restaurant building but is authorized to run up to 1,500.

As of Wednesday, the Legislature’s Appropriations Committee had not taken any further action on the slot revenue proposals.

Rep. Jeremy Fischer, the House chairman of the budget panel, said Wednesday he had spoken with representatives from both Penn National and Cianbro Corp., its Pittsfield-based general contractor, that afternoon. Nothing concrete came out of those talks, he said.

“It is the biggest construction project in the state and it does weigh on us,” said the Presque Isle Democrat.

In the meantime, many of the workers assigned to the project remained idle.

When asked several questions Wednesday about the implications of the work stoppage, the governor stayed “on message,” saying only that he submitted a $6.4 billion balanced budget plan to the Legislature. He said his budget addresses a number of statewide concerns, including calling for fewer public school administrators and boosting the state’s level of funding for public schools to the 55 percent level Maine voters demanded in a June 2004 referendum.

Rather than dip into slots revenues, the governor said his budget proposal calls for an additional $1 tax on cigarettes, a move he said would generate $134 million in additional revenue for the state.

“I’ve given them a direction to go in, but that’s the legislative process,” Baldacci said during a visit to Bangor International Airport for an unrelated event.

The governor left unanswered, however, several specific questions raised this week by various stakeholders in the Penn National project, including representatives of construction companies and the harness-racing industry.

Among those questions were whether he agreed that lawmakers’ efforts to increase the state’s portion of slot machine proceeds would send a negative message to potential out-of-state investors; did he believe the work shutdown would have a ripple effect throughout the region’s economy; and was he not getting involved in resolving the dispute because he never really wanted the gaming industry in Maine in the first place.

To each question, the governor responded that he had presented a proposal to balance the budget and that it was now in the Legislature’s hands.

As it stands, Penn National pays the state a 1 percent tax on its gross slot machine income as well as a 39 percent state tax on its net income and a 3 percent tax to the city.

But Democrats on the Legislature’s budget panel now are considering increasing the state share of the gross slot machine income from 1 percent to 2 percent and reducing the amount of money set aside as the “players’ share,” or the amount of bets that get paid back in winnings, from 93 percent to 92 percent. The proposal would raise an additional $13.8 million for the state over two years.

Republicans on the committee propose capping at 5 percent a year increases in the allotments to various funds and programs, starting in budget year 2009.

Penn National spokesman Eric Schippers said this week that an additional 1 percent tax on gross revenues would increase the company’s tax burden from 51 percent of each dollar of net revenue to 61 percent, rendering the project “unprofitable.”

In a telephone interview Wednesday evening, Fischer of the budget committee, said it likely will be weeks before the panel begins finalizing its budget plan and that the slots issue is one of many that must be addressed. Others include proposals to redistrict public school systems statewide, to cut MaineCare program costs and to increase funding for higher education.

Fischer said it was a “disappointment” that no Penn National representatives were on hand for budget talks on Tuesday, though he said representatives from the Maine Harness Horseman’s Association and the state’s agricultural fair community did attend.

“One of the frustrations was that we asked for them to come back to us with some ideas on how to balance the budget,” he said. That had not happened as of late Wednesday.

“I think that that sort of discussion would have been very productive,” he said.

With regard to Penn National’s decision to halt the Bangor project, Fischer said, “I don’t think their reaction was very productive. People can come to us at any time with their concerns. Our door’s always open to everyone.

“It think it was just a misunderstanding” on Penn National’s part. “I think if they would have come in earlier, they would have seen that nobody on this committee wants to harm them in any way.

“I just think it’s too bad that they had to put people out of work before talking to us,” he said.

He said Wednesday it wasn’t clear when the Penn National issue would come up again.

“It could be as early as tomorrow,” he said.

“All we’re trying to do is balance the budget. There are a million ideas bouncing around and the racino was just one of them.

“I think that most people agree that we have to look at everything in this go around,” he said.

The two controversial slots tax proposals are just that, proposals, he said.

“No one was very wedded to any specific proposal [regarding slots revenue]. I would say they are off the table,” though he acknowledged that, in general, the concept of using slots revenue to help balance the state budget remained under consideration.

“That’s why we would really like to have everyone at the table,” he said, adding, “We’d like to do it sooner rather than later because a lot of people are not working right now because of Penn National’s decision.”