Details sought on slots cash flow

Posted Aug. 17, 2010, at 9:05 p.m.

AUGUSTA, Maine — Lawmakers are taking a closer look at how the state’s share of revenues from Hollywood Slots in Bangor is divvied up and whether that money is being spent the way voters intended.

It has been nearly seven years since Maine voters cleared the way for Hollywood Slots by passing a referendum authorizing slots facilities near horse racing tracks.

According to the November 2003 ballot question, part of the slots proceeds were to be used to “lower prescription drug costs for the elderly and disabled, and for scholarships to the state universities and technical colleges.”

While those initiatives have since received millions of dollars in slots revenues, so have Maine’s harness racing venues, off-track betting parlors and the city of Bangor under a complicated formula designed by the Legislature in the wake of the 2003 vote.

On Tuesday, members of the Legislature’s Legal and Veterans Affairs Committee held the first of several meetings to review that allocation formula and recommend possible changes.

Committee members acknowledged that last winter’s budget-cutting discussions revealed how much they didn’t know about what, exactly, happens to the millions of dollars in slots revenue after it passes through the state’s hands.

So with Maine voters facing another casino referendum this November, the Legislature’s Appropriations and Financial Affairs Committee wrote into the budget that the allocation formula must be revisited annually.

“I got the message loud and clear that they wanted us to be more involved in this and for there to be more transparency,” said Rep. Pamela Jabar Trinward, D-Waterville, co-chairman of the Legal and Veterans Affairs Committee. “It’s a substantial amount of money being distributed every year, and the public does not know where that money is going.”

“If changes need to be made, we have that opportunity later,” added co-chairman Sen. Nancy Sullivan, D-Biddeford. “But we need to hear the reports.”

The formula for how Hollywood Slots revenue is divided — also known as “the cascade” — is no secret, although understanding it is another matter.

State law requires the Bangor racino to give 39 percent of its net slots revenue to various initiatives.

For instance, the Fund for a Healthy Maine received $5.2 million — or 10 percent of net slots revenue — in 2009, according to figures supplied to the committee Tuesday.

Those funds then flow to programs aimed at various health initiatives, including lowering prescription drug prices for the elderly and disabled, preventing youth smoking and improving school nutrition.

Another $1.6 million of slots revenue in 2009 was funneled into scholarship programs at Maine’s public colleges and universities, while the host city of Bangor received roughly $523,000, or 1 percent of the net slots revenue.

Meanwhile, another 10 percent — or $5.2 million — went to supplement horse track racing purses while another account to encourage racing at those tracks received $2.1 million.

All told, initiatives aimed at strengthening or supporting Maine’s horse racing industry and agricultural fairs received more than $11.4 million in slots revenue in 2009.

Part of the challenge facing the committee is a lack of institutional knowledge as a result of legislative term limits and lawmakers changing committees. Relatively few current members served on the committee in 2005 when the “cascade” formula was adopted.

As part of their review, committee members asked racing industry representatives for more detailed information about how the money was spent.

For instance, several committee members asked for attendance figures for the Bangor Raceway and Scarborough Downs to see whether the infusion of additional money has helped.

“We want as much information as possible because we really want to know how this money is being spent, where it is going and what it is being used for,” Trinward told representatives of groups that receive a slice of the funding.

But committee members’ questions also prompted Sen. Debra Plowman, R-Hampden, to raise the question of whether the 39 percent is truly “tax money.”

Plowman said she sees the state as playing the role of a “pass through” agency in which money from one private business — in this case, Hollywood Slots — flows through the state to other businesses.

“When we start getting into micromanaging every single penny, then I think we have overstepped our authority,” Plowman said.

But lawmakers also said they plan to ask the Fund for a Healthy Maine for a thorough accounting to determine whether its expenditures are consistent with voters’ desires.

“This is supposed to be helping the elderly” lower prescription drug prices, said Rep. Linda Valentino, D-Saco.

Hollywood Slots officials attended Tuesday’s meeting but did not address the committee. There also was little discussion of the proposal for a resort casino in Oxford County, which will appear on the November ballot.

The committee is scheduled to meet again at 9 a.m. Sept. 27.

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