Corbett Budget Proposal Cuts $72 Million from Race Horse Development Fund
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Corbett Budget Proposal Cuts $72 Million from Race Horse Development Fund
March 2012

In laying out his $27.1 billion budget plan February 7, Pennsylvania Governor Tom Corbett stuck to his campaign pledge to rein in spending and increase no taxes. His budget proposal for the 2012/2013 fiscal year, which begins July 1, reduces corporate taxes, slashes aid to colleges, reduces programs for the poor, elderly, and disabled – and impacts agriculture, including the Pennsylvania horse racing industry.

A statement issued February 7 by the Pennsylvania Equine Coalition, a statewide group representing more than 10,000 trainers, owners and breeders in Pennsylvania, said “Governor Tom Corbett’s scheme to raid the Race Horse Development Fund by $72 million for each of the next three years will be a devastating blow to the horse racing and breeding industry that candidate Corbett pledged to support on the campaign trail. With the racing and equine industry employing more than 23,000 Pennsylvanians, these cuts will result in significant job losses across the state.”

The law that legalized slot machine gambling in 2004 mandated that more than 11 percent of gross revenue from the ten slot-machine casinos would be earmarked for the Race Horse Development Fund. In 2010-11, about $275 million was supposed to go into the fund. But changes made in 2009 under the Rendell administration required that nearly $50 million a year be transferred into the state General Fund through June 2013 to help ease pressure on the state budget. Corbett’s proposal would up that figure to nearly $120 million being diverted from the racing fund in the year that starts July 1.

The budget contains $56.2 million for agriculture, with cuts of about $76.8 million. Some of the $72 million from the Race Horse Development Fund would go to Penn State agricultural research and extension offices, veterinary activities and the center for infectious disease with the University of Pennsylvania, and payments to state fairs.

Alleged Campaign Reversal
Leaders of the Pennsylvania racing industry said the move represents a major reversal from Governor Corbett’s campaign promise to support the legislative goals of the Pennsylvania Race Horse Development Act, which included enhancing live horse racing and breeding programs in the Commonwealth. Corbett also pledged to “ensure support for the Pennsylvania Horse and Harness racing programs” and said his Administration would “work closely with the racing industry organizations to promote commonwealth racing as an integral part of Pennsylvania agriculture, tourism and cultural heritage.”

“This budget is not supporting the horse racing industry in Pennsylvania – it’s gutting it,” said Todd Mostoller, Executive Director of the Pennsylvania Horsemen's Benevolent and Protective Association. “In one fell swoop, the Governor’s budget cut will decimate the progress made by the industry in attracting new businesses and preserving open space, creating jobs, and providing health care benefits for Pennsylvanians. Raiding the fund demonstrates a clear lack of support for a major economic driver within the agricultural economy of the state.”

“Coming on top of an already planned $47 million transfer from the Race Horse Development Fund to the state’s General Fund, we are now looking at a roughly $120 million loss in the 2012-2013 fiscal year,” said Ron Batoni, Executive Director of the Pennsylvania Harness Horsemen’s Association. “That means a significant decrease in purses, which are used to pay everyone from blacksmiths to veterinarians to stable hands. Trainers and owners who brought their horses and businesses to Pennsylvania with the expectation of competing for a certain level of purses are going to pull up stakes and make their investments elsewhere. Sadly, they won’t be back – because they are not going to have any faith or trust in our elected officials.”

“In his budget address, Governor Corbett said a top priority was job creation, but this budget gimmick will costs thousands of Pennsylvanians in the agriculture and service industries their jobs,” said Salvatore M. DeBunda, Esquire, President of the Pennsylvania Thoroughbred Horseman’s Association, who noted the job loss projection were based on an economic impact study prepared by The Innovation Group in 2011. “These cuts will discourage continued investment in our state, resulting in the loss of precious open space now being used by horse farms.”

In an Associated Press report, Corbett’s spokesman, Kevin Harley, said his boss did not break a campaign promise. Corbett pledged only to promote the industry through educational venues such as the agricultural fairs, he said. “He never made a commitment of financial support,” Harley said, citing the state’s ongoing budget problems.

Competition from Other States
“The timing couldn't be worse as the New York breeding program is attracting horsemen from across the country due to the introduction of slots in October of 2011. If the proposed budget is adopted, it will result in horsemen leaving the state and a subsequent loss in jobs,” said Jeb Hannum, Executive Secretary of the Pennsylvania Horse Breeders Association. “Racing and breeding are significant economic drivers in the state which support over 20,000 jobs. This is a $1 billion industry which supports rural communities and the state's agricultural economy. The Governor runs the risk of driving good jobs to Maryland and New York and harming Pennsylvania’s agricultural interest as a result.”

“These cuts will only hurt efforts to jumpstart the Pennsylvania economy,” said David Prushnok, President of the Standardbred Breeders Association of Pennsylvania. “Families across the Commonwealth will see a significant loss in the amount of money they earn each year, including farmers producing feed, blacksmiths, veterinarians, trainers, groomers, and countless other Pennsylvanians who provide services to the racing and breeding industry.”

“Owners, trainers and breeders have invested millions of dollars in Pennsylvania with the legislative promise that horse racing would provide a good return on their investment,” said Kim Hankins, Executive Director of the Meadows Standarbred Owners Association. “It is unfathomable that the Governor now wants to stifle the growth of this still emerging industry that helps fund the economic impact of agriculture, the number one industry in the Commonwealth. Given the competition of West Virginia gaming and Ohio gaming on the horizon, these cuts in the Race Horse Development Fund will be disastrous to racing at the Meadows.”

“When the legislature legalized gaming in Pennsylvania, their primary stated goals were to save the horse racing and breeding industry, boost the state’s agricultural sector, and provide for the health and pension benefits of trainers and other employed by the industry,” said DeBunda, whose organization -- the Pennsylvania Thoroughbred Horseman’s Association -- represents the owners and trainers at Parx Racetrack. “At Parx Racing alone, we estimate an $80,000 decrease in the purses awarded per day, a substantial reduction in breeder awards for Pennsylvania-breds, and a significant reduction in health and pension benefits for our members, all of which will negatively impact the Pennsylvania economy. These cuts will discourage owners, trainers, and jockeys from continuing to participate in the Pennsylvania horse racing industry and could jeopardize the continuation of the Pennsylvania Derby and the Cotillion Stakes, which was recently named Pennsylvania’s first and only Grade I Stakes race.”

A study prepared by The Innovation Group found that every $1 in direct spending within the racing industry equates to $2.13 in total spending within the Pennsylvania economy, resulting in an annual state economic impact of $490 million.

The Pennsylvania Equine Coalition is a statewide group representing more than 10,000 owners and trainers of the horseracing industry in Pennsylvania. Members of the coalition include the Pennsylvania Harness Horsemen’s Association, the Pennsylvania Thoroughbred Horsemen’s Association, the Standardbred Breeders Association of Pennsylvania, the Pennsylvania Horse Breeders Association, the Meadows Standardbred Owners Association, and the Pennsylvania Horsemen’s Benevolent & Protective Association.

DCNR Budget Cut as Well
Pennsylvania’s Department of Conservation and Natural Resources, which oversees state parks and forests used for trail riding, faces a five percent decrease in funding. DCNR’s budget, cut for the fifth year in a row, is now two thirds of what it was when the agency was created 17 years ago. In the Governor’s proposal, funding for park and forestry rehabilitation, grants for community recreation, and grants to land trusts for open space conservation have been zeroed out. Over $46 million that would otherwise have gone to those uses has been transferred from the Keystone Recreation, Park and Conservation Fund to the General Fund