The state should keep its word

State budget discussions are placing Penn National’s proposed $130 million investment in Bangor in jeopardy.

One proposal would double the state tax on all amounts wagered, effectively moving the tax on slots to over 60 percent. A second would place a 5 percent cap on the growth of funds flowing to beneficiaries of slot revenue – including harness racing, the Fund for a Healthy Maine, agricultural fairs, and college scholarships. This would dramatically limit the amounts going to these purposes by fixing the base for these payments at the current 475-machine level, even though the permanent facility is planned for up to 1,500.

In 2003, voters in the state and in Bangor separately approved ballot questions that authorized slot machines at commercial harness tracks. Under the voter approved state measure, slot revenues were to be taxed at 25 percent. In 2004, the Legislature revised the referendum’s language to enhance accountability and to increase the tax to 48 percent. This final law was the result of long and hard negotiations between the interested parties – negotiations that recognized the will of the people as expressed at the ballot box.

Now the Legislature’s Appropriations Committee is considering undoing this hard work and compromise – with consequences that may be devastating to our region.

Increasing the tax on slots to over 60 percent will virtually eliminate any return on Penn National’s planned investment in Bangor, an investment that carries with it the promise of hundreds of new jobs, financing for a new Bangor arena, and revenue to rejuvenate harness racing and the agricultural industries that it supports. It would force Penn to consider scaling back or delaying the permanent slot facility or abandoning the project altogether. Any of these options will result in the loss of good full-time jobs with benefits and reduce future revenues to the state and other slot beneficiaries including the city.

Capping the funds that beneficiaries can receive will limit the economic benefit to these entities, a primary reason that many voters supported the slot referendum. We are particularly concerned about the impact on harness racing, an industry that has just begun to show signs of recovery.

The city of Bangor would also see less revenue – revenue that we have dedicated toward constructing a new arena and conference center designed to further support economic activity throughout our region. A 2002 marketing study for such a facility found that direct annual spending associated with it would range between $14.2 million and $19.2 million. After applying a conservative multiplier, this would result in a total economic impact of between $21.2 million and $28.3 million and would create or support between 1,000 and 1,300 jobs. The facility would also provide significant new tax revenue, primarily to the state, estimated at between $1.3 million and $1.8 million per year.

For years, the city petitioned the state for a revenue source other than property taxes that would allow us to replace the aging and outdated Bangor Auditorium. We were repeatedly sent away empty-handed. Slot revenue provides this financing option – and the state is now placing this option in jeopardy.

Dramatic changes to Maine’s gambling statutes would send a clear message to businesses that the rules of the game can be changed whenever the Legislature chooses to change them – that the foundation for investing in Maine is quicksand, not granite.

All too often, public policy is driven by immediate concerns such as the budget issues faced by the state. To address today’s problems in a way that negatively impacts future revenues and regional economic development would be profoundly counterproductive and shortsighted. In this instance, the Legislature would also effectively undo the will of the voters of the state and of the city.

We urge the Legislature and administration to reject efforts to change Maine’s existing slot laws and regulations and to send a clear message that the hard work and compromises embedded in current statutes will be honored. Three years ago, Penn National, the state of Maine, the harness-racing industry, and other beneficiaries shook hands on a deal that allowed Hollywood Slots to move forward. We have just begun to see the benefits of that agreement. It should and must be maintained.

Penn has kept its word. The state must keep its.

Richard D. Greene is the mayor of Bangor.