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Commentary: Budgets, politics and slots

My, my just look at the emperor’s new slots machines! What taste, what élan, what a guy!

We, of course, are bankrolling the deal. We just laid out $50 million for 1,000 machines — $46,542 per. We were led to believe the price would be a fraction of that number. Why didn’t we shop around? We did? Oh my.

Gov. Martin O’Malley and Treasurer Nancy K. Kopp say we had to push forward. They voted yes when the Board of Public Works approved the deal last week. Comptroller Peter Franchot voted no, decrying a “windfall” for the sellers.

Windfall? It looks more like a heist, a sale under duress. Maryland has a big budget gap. It needs the revenue these Rolls-Royces of the slot machine world will produce — allegedly.

We look as helpless as BP in the Gulf.

We’re handcuffed by circumstance. A clear majority of Marylanders voted to allow the machines. Propelled by that decision and the budget jam, O’Malley and the General Assembly are now obliged to provide the machines, apparently at any cost.

Let the voters sort it out

And of course politics has a role.

Some voters decided slots were a better alternative than higher taxes. (It might not have mattered, but the cost of machines was not part of the picture then.) O’Malley, though never a fan of slots, can hardly call a halt to the procurement. He’s in a campaign for re-election and taking fire for raising taxes in 2007. Never mind that he had a $1.5 billion budget shortfall to manage.

His opponent, former governor Robert L. Ehrlich Jr., helped create the budget gap. But that won’t foreclose an attack on O’Malley. Fair in politics, perhaps. The governor must defend his decision and rightly so. Let the voters sort it out.

While they do that, though, O’Malley may not wish to stand in the way of the new machines. Can you hear the conversations?

“He raised taxes. And he needs more money? And he wants to delay purchase of the slot machines? They could be raking in the dough and he says ‘wait’?”

Ehrlich will be saying: “Well, if we’d done this sooner — bought the machines and built the palaces when I was in office four years ago — the cost would not have been so high. And the bucks would be cascading into the state.”

But here’s the really inconvenient question: Will these behavior-shaping machines, when up and running, bring in the estimated $600 million? They’re said to be very sophisticated, able to do everything but reach into your pocket. But will they perform as advertised even after costing about four times the earlier sticker price?

And the real number is…

They won’t, predicts Aaron Meisner, one of the chief opponents of slots in Maryland.

“The best-case scenario had $600 million going to schools,” he says. But buying the machines will cut into that sum. “The machines will need to be ‘refreshed’ every five years at least to stay current with technology and trends.  So, $750 million purchase price (for 15,000 machines) divided by 5 years is a cost of $150 million per year.”

He advises adjusting the $600 million to a more reasonable $400 million. The cost of the machines has gone up and there’s more competition for the gambling dollar. Finally, Meisner says, subtract the $150 million- per-year cost of purchase and you have a take for the state of $250 million, not $600 million.

It’s an I-told-you-so, doomsday scenario, to be sure. But the questions are worth considering — or would be if there was a choice. And, if you’re the governor, there may be no choice.

And, at this point, there may be no one to make the case as firmly as necessary. Comptroller Franchot persists in opposing slots. But he’s long since backed down from pointed criticism of the governor. He’s not likely to renew the struggle in an election year.

So Maryland plunges ahead, hoping there is still a bit of gold left at the end of the rainbow. If there is, we the people put it there.

C. Fraser Smith is senior news analyst at WYPR-FM. His column appears Fridays in The Daily Record. His e-mail address is