Tuesday, June 18, 2002

Slow budget may hurt tracks

Tax breaks at stake for Churchill, Keeneland

The Associated Press

        FRANKFORT — Kentucky's marquee racetracks face financial losses if the General Assembly misses its July 1 deadline to pass a state budget.

        The current budget contains tax breaks for Churchill Downs and Keeneland. The credits are intended to put the two big tracks on par with two smaller harness tracks — The Red Mile and Thunder Ridge — that pay a lower tax rate on money wagered.

        Churchill Downs and Keeneland each keep $12,000 of the state's tax on wagers for each day the track is open for racing. That equals about $960,000 for Churchill, which holds races on about 80 days of each year, and $372,000 for Keeneland, which races only about 31 days a year.

        The tax break requires that the tracks spend half of the savings on capital improvements and the other half on purses and other programs to help horsemen.

        But the new fiscal year begins July 1 — and when the current budget expires, so will the credits.

        Churchill president Alex Waldrop said if the tax break is not restored by next year, it might cause track directors to scale down a planned $100 million second phase of a massive renovation project. That phase is to begin next year.

        “This would be significant because it would erode our ability to compete for the entertainment dollar at a time we're facing the toughest competition ever,” Mr. Waldrop said.

        Keeneland spokeswoman Julie Balog said the loss at Keeneland would be felt more by horsemen, who have benefited from higher purses and capital improvements made at Keeneland's training facility.

        Gene McLean, a lobbyist who represents The Red Mile and Thunder Ridge, said the two tracks combined stand to lose more than $500,000 if they lose their tax break.

        “Churchill is a big national player. And Keeneland gets lots of revenue from its horse sales. But these smaller tracks in Kentucky are really struggling,” Mr. McLean said. “Any economic hit that a small track takes today is very significant.”

        Mr. Patton proposed a $35 billion, two-year budget to a special session of the General Assembly in April. It was rejected because of the deadlock over whether it should provide any money to the 2003 campaigns of candidates for governor who agree to cap their spending.

        The passage of a budget within two weeks appears unlikely. Leaders of the Republican-controlled Senate and Democratic-controlled House still must meet and resolve their differences over campaign financing. No such meeting has been planned.

        Other more minor disagreements would also have to be resolved. Patton has said he must be satisfied with the product of such negotiations — and convinced that it will pass both chambers — before he will go to the expense of calling another special session.

        Patton is scheduled to leave for England on Thursday for a five-day trip to promote tourism in Kentucky, though he has said he'll cancel his trip if there's hope of a resolution.

        If no deal is reached, the tax breaks expire.

        Patton's budget director, Jim Ramsey, said that administration attorneys are fairly sure the spending plan cannot extend tax breaks or change any tax law.

        “Our attorneys have given us the green light to proceed with most things, but any changes in tax policy that are not formally passed by the General Assembly are a different matter,” Ramsey said. “No final decisions have been made on anything, but for now we don't believe we can proceed with those.”


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