Racino push may wither again

There was little fanfare when not one but two racino bills surfaced in the Minnesota Legislature last week.
The perennial proposal to install slot machines in racetracks usually enters into the political milieu with news conferences and headlines — but not this year, even with newly elected Senate Majority Leader Dave Senjem as the chief author of both bills.

“It’s kind of a tradition,” Senjem said casually of the proposals on Thursday. His bills — one backed by the Running Aces Harness Park and another supported by Canterbury Park — would install a racino at both racetracks and funnel about $133 million annually to the state. “We put it in the mix,” he said, “and see if it survives.” By Senjem’s count, racino almost has the votes needed to pass in his chamber: “We know that we’re pretty close, if a vote needed to be taken. I think that we may be three or four votes away, and it may be possible.”

But racino’s quiet legislative debut this year could be the prelude to another quiet death for the bill, whose advocates had seen 2012 as a rare opportunity to push the measure through the Legislature as a means of financing a Vikings stadium or beginning to pay back the state’s ballooning debt to Minnesota schools.

In the view of many Capitol observers, the racino bill reached its peak of support in the July 2011 special session, when some Senate Republicans claimed they had the votes to pass racino if the proceeds were tied to paying back the unpopular K-12 aid shift, which now exceeds $2 billion. Even then, however, racino advocates admitted they were at least 15 votes short in the House.

Heading into Session 2012, prospects look bleaker for racino. Electronic pulltabs have become the funding mechanism of choice for a new Vikings stadium, and at least one GOP-tied interest group, the Taxpayers League of Minnesota, has already demonstrated a willingness to put public heat on pro-gambling Republican legislators. One worry among GOP legislators is that anti-gambling expansion interests and other taxing-and-spending watchdog organizations could pile on if they advance any gambling bills this year.

E-pulltabs favored by stadium backers

By design the racino bills are light on earmarks for the state’s cut of the revenues, but advocates point to the Vikings stadium and accelerated payback of the huge K-12 aid shift as the most viable options in 2012.
But electronic pulltabs, not racino, have become Gov. Mark Dayton’s financing vehicle of choice for the stadium. The state’s 11 Indian tribes have said they would not sue the state over the proposal, and GOP and DFL stadium leaders in the Legislature have come on board with e-pulltabs, too.

GOP Sen. Julie Rosen, a chief author on Vikings legislation, said she “absolutely thinks it’s imperative” to have a vote on racino this year but adds that tying it to a stadium bill is “problematic for both racino and stadium interests.” Longtime racino backer Senjem, for his part, has expressed reservations about the soundness of e-pulltab fiscal estimates that claim the state would receive $72 million a year in added revenues.

Using racino dollars to pay back the school shift was a popular notion during the special session, when tensions were at an all-time high over GOP leaders’ and Gov. Mark Dayton’s use of one-time fixes to patch the deficit. A handful of moderate rural legislators, including new Assistant Majority Leader Claire Robling, proposed passing racino tied to the school shift during the special session. But the senators said they did not have the supermajority required to suspend the rules in order to add it to the schedule.

Now, absent the pressure associated with the shutdown, some senators are less inclined to brush off social concerns about gambling in the name of paying back the school shift. Freshman Republican Sen. John Carlson of Bemidji is in that camp. “I’m just not in favor,” Carlson told Capitol Report last fall. “I think there was probably a point at which I made a comment during the shutdown that if this was a bitter pill I had to swallow to get out of the shutdown, I would look at something like that. But we’re out of the shutdown, and I’m not a fan.”

To pass a racino proposal, Republicans would also have to gather votes from a significant number of Democrats, a job that some say will be more difficult after early-session moves by Senate Republicans to fire former DFL Sen. Ellen Anderson as chairwoman of the Public Utilities Commission and to cut the Senate DFL’s partisan staffing budget. Both votes have angered Democrats.

Rep. Denise Dittrich is one of five DFLers (along with Reps. Kory Kath, John Benson and Larry Hosch and Sen. Chuck Wiger) to sign on to the racino bill. The moderate Democrat from Champlin said tying racino dollars to the school shift is what won her support. “We owe the schools $2 billion, and I don’t see any other way to start paying down that debt unless we find new revenue or funding,” she said. “Right now it looks to me like that might be our only chance.”

But Dittrich said DFLers in the House — where racino has run into the most difficulty — prefer tax increases to pay back the school shift. “I don’t see the overlap there,” she said. “I think people are concerned about it, but I don’t think people see racino as a viable option. I think the DFL caucus is much more committed to taxing the rich and using that possibly to paying off the school shift.”

Racino lobbying divisions

A perennial obstacle for racino interests has been a divided lobbying effort from the state’s two racetracks, Canterbury Park and Running Aces Harness Park. That division seemed to widen this year when Canterbury and its racino spokesman, former Republican Senate Minority Leader Dick Day, parted ways and Day moved over to Running Aces to lead their racino effort. For the first time, Running Aces has introduced its own racino bill, putting it in direct competition with Canterbury’s proposal.

The two proposals feature only slight differences. Canterbury’s bill puts more emphasis on setting up a special fund for the horse industry, while Running Aces’ lobbying efforts are focused on pushing a racino tied to paying back the school shift. GOP Rep. Bob Gunther is the lead author of the Running Aces bill in the House, but GOP Rep. Pat Garofalo is said to be likely to introduce another racino bill in conjunction with Canterbury that is tied to paying back the school shift. (Asked about the proposal this week, Garofalo said only, “We would need to get back to you on that.”)

Ron Rosenbaum, spokesman for Canterbury’s racino effort, said that while the track’s management favors a bill that gives a share of the money to the horse industry, he hopes that the two tracks can work out their differences in short order. “Running Aces has a slightly different idea,” he said. “It’s our hope and belief that these two different versions will be smoothed over and we will all be supporting the same proposal in the end.”

Day agrees, adding that Gunther is setting up a meeting of racino lobbyists and advocates this week to try to coordinate their so-far divergent efforts.

“I think that’s very close to being done,” Day said. “That helps us and gives us two public relation firms working together to pass racino. The bills lay out positions that are a little bit different. Gunther is planning to have a meeting and pull all the different people together. I feel real positive about that.”

Outside anti-gambling pressures

While racino has many political enemies, it was the Taxpayers League of Minnesota that came out swinging first this year. Phil Krinkie, president of the league and a 15-year Republican veteran of the House, sent an email to supporters of the conservative group with the subject line: “Why Do Politicians Break Their Promises?”

The group called on its members to contact seven Republican lawmakers and ask them why they are backing a racino bill in the Legislature, which Krinkie says is essentially a tax increase because the state would take a cut of the money from the machines.

The lawmakers being targeted include some of the Legislature’s most fiscally conservative Republicans: Reps. Mark Buesgens, Bob Gunther, Bob Barrett, Andrea Kieffer, Branden Petersen and Sen. Mike Parry. Rep. Linda Runbeck, a former president of the Taxpayers League who now holds Krinkie’s old seat in the House, is also on the list.

In an editorial in the Morris-Sun Times, Krinkie says lawmakers are “proposing to use the new tax revenue from the horse track gaming monopoly to fund another government created monopoly, a new Vikings stadium.” Krinkie could not be reached for comment.

For Democrats, the historical pressure from tribal groups to maintain their monopoly on gambling will be a factor in any 2012 vote. The tribes are already looking to influence the fall elections, contributing several hundred thousand dollars to legislative candidates and caucuses last year.