Gambling supporters pose slots-or-pensions scenario

‘‘We’re already struggling with our own economies. We cannot afford for slots not to pass,” Baltimore County Executive James T. Smith Jr. told the Montgomery County Council on Tuesday.

Smith is president of the Maryland Association of Counties and appeared before the council armed with a table designed to bring home his point.

The state’s contribution to Montgomery teacher pensions is $217.1 million a year. That translates to a 15-cent increase to the county’s property tax rate, according to a chart Smith provided the council.

‘‘If slots does not pass, there is $660 million they’re going to have to find somewhere,” Smith told the nine council members.

It sounds like an argument tailor-made to give any gambling fence-sitter reason to think twice.

‘Political extortion’

‘‘And basically, most people when confronted with extortion react to it. As far as I am concerned, this is political extortion at the highest order,” Caroline County Commissioners President John W. Cole said.

His county, according to Smith’s table, would be hit the hardest if the state pulls out of teacher pensions. The state pays nearly $2 million a year, which translates to 24 cents on the tax rate.

A former employee at Dover Downs racetrack in Delaware, Cole (R) said he has seen the damage caused by gambling, with people facing jail or losing homes.

‘‘The fact is both Republicans and Democrats are supporting a terrible solution to the problem. We need to get back to being responsible stewards of the tax dollar,” he said.

Across the Chesapeake Bay, however, St. Mary’s County Commissioners President Francis Jack Russell said the tax issue strengthens the slots position.

‘‘I think it would be a slam-dunk for slot machines if this was the realistic way it was going to have to play out,” said Russell (D) of St. George Island.

Compared to Montgomery and Caroline, St. Mary’s gets off relatively easy. To make up $7.9 million, the county would have to raise its tax rate a dime.

‘‘People are burdened enough now. They’re being strangled to death now ... so I hope we certainly don’t come up with this situation.”

All about money

When Marylanders vote for a president Nov. 4, they’ll also be deciding whether the state constitution should allow 15,000 slot machines in five locations around the state. Analysts say the machines, in 2013 when the program is fully online, will collect about $13 billion a year, with 90 percent going out as payouts. Licensees will receive $449.3 million.

The state would get $918.6 million, with $95.3 million going to improve purses at racetracks, $74.9 million to jurisdictions with the slots parlors, $34 million to renew the tracks, $27.2 million to administer the machines, $20.4 million for minority contracts and $6.3 million for problem gambling.

That leaves $660.4 million for the Education Trust Fund.

‘‘Quite frankly, this state has an abysmal track record of dedicating funds and keeping them in the areas where they were dedicated,” Cole said.

Highway-user revenues, which counties use for road programs, ‘‘have been diverted to take care of their drunken-sailor spending in Annapolis,” he said.

Promises, promises

Even though a constitutional amendment will legalize slot machines, there might be some debate where slots revenue ends up.

‘‘What goes into the constitution is one thing. That implementation legislation is another gig,” said Del. Galen R. Clagett, a member of the House Appropriations Committee.

Earmarks and dedications limit state flexibility, said Clagett (D-Dist. 3A) of Frederick.

The debate occurs as even the Maryland economy sours. On Wednesday, the legislature’s budget guru, Warren G. Deschenaux, presented MACo with a bevy of depressing news. Unemployment claims and foreclosures are up; sales of cars and homes are down; and welfare cases are up. Six of 12 state revenue categories are short of expectations, leading to a $23.9 million shortfall through the first 11 months of fiscal 2008, which ended June 30.

But a sinking economy is no reason to turn to slot machines, said Montgomery County Councilman George L. Leventhal.

‘‘There was a time when we had a surplus and money was pouring in. That will come back and we’ll still be stuck with slot machines. We should not act out of desperation because of a temporary downturn in the economy,” said Leventhal (D-At-large) of Takoma Park.

Real conundrum

Senate Minority Leader David R. Brinkley, a member of the Budget and Taxation Committee, said counties have reason to be worried if the referendum fails.

‘‘Local governments have been beneficiaries of a lot of the state’s increase in spending, and I think any type of economic slowdown in the state is going to have repercussions there,” said Brinkley (R-Dist. 4) of New Market.

Montgomery County Executive Isiah Leggett (D) remains opposed to slots, but a year ago counseled county lawmakers — some are strong slots opponents — to keep quiet about their reservations to statewide gambling.

‘‘For us to believe that the slots referendum can fail and there not be any consequences for the counties, we would have our heads buried in the sand,” he said Wednesday.

‘‘What I’ve been telling people who are opposed to slots is if there are other options out there, I’d like to see them. My challenge has been, if you don’t want slots, what else is there that could fill the [budget] gap?”

MACo is not the only statewide organization supporting slots.

The Maryland State Teachers Association also took a position in favor of the referendum. But MSTA President Clara Floyd said the union would not wage a public fight. And pensions did not come up when the MSTA chose its position, she said.

But Clagett praised Smith for making the connection between slots and teacher retirement.

‘‘Bringing out the pension system is a good sell on his part. It may push some people over to do slots, and I want to see slots pass,” he said.

The slots-or-pensions scenario is being roundly criticized by slots opponents.

‘‘I think it’s shameful to hold the kids and the teachers of Maryland hostage to the national gambling industry,” Comptroller Peter V.R. Franchot (D) said. ‘‘When the public focuses and sees who benefits, the small support they have in the polls, I believe, will disappear.”

‘‘This is a campaign that is going to come down on who do you trust,” said Scott Arceneaux, senior adviser with Marylanders United to Stop Slots.

‘‘The people who brought you the largest tax increase are saying do this or we’re going to raise your taxes some more. Don’t bet on Annapolis.”

Aaron Meisner, coordinating chairman of Stop Slots Maryland, agreed.

‘‘People like Jim Smith believe that there is over a billion dollars just lying in the streets of Maryland waiting to be harvested by the miracle of gambling,” he said.

Money the state collects through gambling will be money that won’t go into buying a home or starting a business, he said.

‘‘This is not a question of whether teacher pensions are funded at the state or the county level. It’s a question on whether we’re going to put a billion-dollar drag on our economy,” Meisner said.

But to David Bliden, MACo’s executive director, the choice between slots and pensions is very real.

‘‘It’s not a conjured argument that was foisted upon us by a slots advocacy group. It’s a constructive position that seeks to comport with reality,” Bliden said. Public safety, vaccinations and teacher retirements could be hurt if the state trims aid to counties.

‘‘The real question is, is it a bluff or not? I wouldn’t be betting it’s a bluff. What other card do they have?” Bliden said.