General Assembly passes alcohol tax, horse racing subsidies
Posted: 6:58 pm Mon, April 11, 2011
Daily Record Business Writer
The 40-5 vote in the Senate and 107-27 vote in the House of Delegates just minutes later resolved an issue that, earlier in the day, Gov. Martin O’Malley said was “very much hung up in the waning hours of the General Assembly session.”
The Maryland Jockey Club, which owns Pimlico Race Course and Laurel Park, would be eligible for up to $6 million in operating subsidies in 2012 and 2013, and harness tracks at Rosecroft Raceway and Ocean Downs could receive $1.2 million each.
Changes made by the Senate would require the jockey club and Rosecroft to reach a simulcast agreement before receiving state subsidies.
The issue that held the legislation up for most of the day was the tangled ownership of the state’s thoroughbred and standardbred tracks. Penn National Gaming Inc. is the new owner of Rosecroft and holds 49 percent of the jockey club, though has stated its intention to sell that stake.
The bill, HB 1039, would require Penn National to recuse itself from the thoroughbred side of the negotiations or sell its share of the club before negotiating enter arbitration on the simulcast deal.
In addition to the simulcast condition in the Senate’s version of the legislation, the jockey club would also have to have a sustainable plan for the future of the industry that lawmakers find acceptable to claim the 2013 subsidy. That plan would be due Dec. 1.
“What we’re trying to do here is buy some time” for the industry, said Sen. David Brinkley, R-Frederick.
“It means a lot of jobs for a lot of people in Maryland,” Senate President Thomas V. Mike Miller Jr.
But, some lawmakers complained the state subsidies, which would be redirected from slots revenues earmarked for capital improvements for the tracks, would go to the jockey club after the club fought in court and at the ballot box to stop development of what would be the state’s largest casino.
“The Maryland Jockey Club has waged a war to stop Arundel Mills from getting slots, stopping [The Cordish Cos.] from getting slots, costing the taxpayers millions of dollars,” said Sen. James Brochin, D-Baltimore County.
Brochin attempted to strip the jockey club subsidies from the bill, but was denied, 33-6.
Maryland’s alcohol sales tax, meanwhile, will climb 50 percent on July 1 following another series of votes in both chambers earlier in the night.
The move from the 6 percent sales tax to 9 percent would raise $87 million for the state, including $47.5 million for school construction and $15 million for mental health.
Republican lawmakers decried the increase, for the impact on business and the speed with which it happened. The House of Delegates introduced and implemented the plan Saturday and sent a pair of bills to the Senate earlier today.
“This was a political decision, nothing based on fact,” said Senate Minority Whip E.J. Pipkin, R-Upper Shore.
Supporters of the measure lauded the school money headed to districts around the state, which they said will help create construction jobs.
“This allows us to give each and every county badly needed school construction money,” said Sen. Richard S. Madaleno Jr., D-Montgomery.
Legislation to fill a state-run venture capital fund with at least $70 million for investments in small, high-tech companies cleared the General Assembly Monday night.
Gov. Martin O’Malley said the venture fund plan, his signature economic proposal known as Invest Maryland, “would be a real shot in the arm” for the state’s economy.
The bill is a trimmed-down version of what O’Malley first proposed last summer and made his top economic initiative when the legislature convened in January. Invest Maryland is designed to capitalize on the research done at and around the colleges, universities and government facilities in the state.
“We rank very low when it comes to the venture capital available to our entrepreneurs,” Madaleno said.
The state would auction $100 million in tax credits for as little as 70 cents on the dollar to raise at least $70 million to fuel a venture capital fund. The governor had sought $142 million in credits to raise about $100 million for the fund.
The Senate Budget and Taxation Committee added a provision that would allow the governor to pay for some or all of the program with cash if the state’s fiscal situation improves by the fall. Committee members also added language designed to boost investment in companies in rural counties.
The state Senate approved the plan 34-12 Monday afternoon and the House Ways and Means Committee agreed to accept the upper house’s changes hours later, leaving a vote before the full House of Delegates as Invest Maryland’s final legislative hurdle.
The money would be used to make investments in small, high-tech Maryland companies. One-third of the money would be controlled by the Department of Business and Economic Development, which would focus its investments on entrepreneurial and early-stage companies. Two-thirds would be invested on the state’s behalf by private venture capitalists, with a focus on larger, growth-stage firms.
“The capital really plays to our strengths,” DBED Secretary Christian Johansson said Saturday. “I think it will have a significant impact on the state’s economy.”
The General Assembly approved the framework for a public health care exchange Monday morning where individuals and small businesses would one day be able to compare and purchase insurance policies.
Maryland’s exchange would rate health policies based on price and quality and determine which individuals and companies would receive tax credits and other subsidies. The state has received nearly $1 million in federal funds to implement the program, which must be up and running by Jan. 1, 2014.
A Senate committee also killed a proposal to put expiration dates on 29 state tax credit programs and require them to come up for regular evaluation and approval. The House had passed the bill 100-38, spurring a lobbying effort in the Senate by business interests worried that uncertainty created by the bill would scare companies away from Maryland.
“These job creation efforts are vital to our economy,” said Ron Wineholt, a Maryland Chamber of Commerce lobbyist. “That bill would have set a bad precedent and been an unnecessary exercise because many of these credits have extensive annual reporting requirements already.”