Comments on: Under The Lights At Churchill Downs

By: Carl H

Carl H — Fri, 19 Jun 2009 16:11:56 +0000

I’m with you on using the schools as a spin tactic for political gain, don’t think that is right in the least and I may have fallen prey to listening to the spin. But politicians are going to spin and spin no matter what. If slots are going to help, let’s put in the slots. Use the revenues to pay off our current debt first, and then go after education. But of course, then our school systems suffer for the next five or ten years or however long it takes to pay the debt off, and our public school system needs help one could argue just as badly as the horses do.
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I don’t know what else money is being spent on, but I think education should be at or near the top of the list. Now I’m nowhere near the smartest human alive (likely closer to the opposite end of that spectrum), but I work in an industry that mandates contact with my fellow Kentuckians across the map, and education is most certainly NOT a strong point for this state right now.

By: Jay

Jay — Fri, 19 Jun 2009 15:22:10 +0000

Let me start by saying that I completely understand that this is addressed to save the horse industry. But to sell this, Stumbo is using the promise of new schools as a carrot to entice the legislators to vote for the slots. He is in effect bribing them with something that they can take back to their voters and say “Look at the new schools that I was able to bring to this area”. They could use that for their entire political career, and Stumbo knows this. By making the proposal for the new schools part of this, it puts the Legislators in a position to either vote yes for the slots, or vote no and have people accuse them of not wanting to improve the school system. The problem with this is that the way they are proposing to fund the school upgrades with more debt. It is not fiscally responsible and can damage the state financially for years to come.

I am not saying that putting the slots at the tracks is a bad thing. I agree that people are going to use their discretionary income anyway, so why not in KY? I agree that it would also increase profits and tax revenue. My comment was aimed more at the school portion of the article than anything else. As a state, we are already restructuring our debt and deferring payments so that we can meet our obligations. We simply cannot handle more debt right now. If they issue the proposed bonds, it will bury the state in a mountain of debt, with zero guarantees that the increased revenue from the tracks will be enough to cover the increased risk.

It is like a family that has $50,000 in credit card debt, and realize that they cannot make the payments because their income has dropped. So they try to restructure all of their payments so they can continue to make their minimum payments without it hurting their credit. Then they make the decision to take on $500,000 MORE in debt to try to start a new business that may or may not bring in the income necessary income to repay the $500,000. Would you advise a family or individual to do this? When they are already on the brink of not being able to meet their current obligations? That is what is happening with the state right now. The risks for issuing that much debt are very great.

Again, I am not against the slots at the race tracks. I don’t really see a downside to putting video slots at the tracks when people are already gambling on site. I just don’t think that you can start issuing massive amounts of loans when you have no assets to back it up.

By: Carl H

Carl H — Fri, 19 Jun 2009 14:49:10 +0000

Thanks for your comment Jay. I agree with all of your points and understand there is more to the issue than just horse racing and schools, but this is not a panacea for Kentucky’s economy. This proposal is addressed to save horse racing and the horse industry, not to cure the state’s budget problem (though I believe it would still help).
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I don’t think Senator Williams’ proposal to tax lottery sales and out-of-state betting on KY races makes much sense, especially when at the current rate we aren’t going to have any races for people out-of-state to bet on… Also Kentuckians are already taking billions of dollars across state lines to Indiana, Illinois and Missouri casinos, why not put some of that money directly into Kentucky’s economy? Not only would there be profits from the slots, but the tracks would also see added revenue and the state would see increased revenue from personal income tax from the creation of new jobs.
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Yes, there are the “what if’s” that you mention, but that is why you weigh the risks and rewards and from what I can tell the rewards far outweigh the risks right now.

By: Jay

Jay — Fri, 19 Jun 2009 14:22:38 +0000

Please don’t forget that the lottery was supposed to fund education in KY, and it didn’t quite work out the way they promised it would. Six months ago the Student Loan group was almost broke. They had no money to lend. Borrowing is part of the issue with the new school projects that are supposed to be funded by adding the machines at the tracks. The increased revenues are not going to fund all of the new schools. As a state, we still have to issue bonds to pay for the projects. They are proposing $850 million in new debt to cover the construction. We already cannot repay the debt we have. If we take on that much more debt, it hurts our credit rating as a state, and will make it harder to borrow money in the future. The money from the slots will help repay the bond debt, but how do they know how much will be available? What if it doesn’t save horse racing the way they think it will, and then we are stuck with almost a billion in debt that we cannot repay? We already have a budget shortfall, so does it make sense to take on more debt? There is more to this issue than just saving horse racing in KY and building new schools. Of course everyone wants to do both of those things, but there are greater ramifications to this that are not being reported in the media. It is not as cut and dry as it may seem.