Gov. Steve Beshear said Kentucky’s thoroughbred racing industry is “close to being in free fall and I think it will be tragic if we don’t do everything we can to prevent that.”

His comments followed a 90-minute meeting Thursday with House Speaker Greg Stumbo, D-Prestonsburg, and Speaker Pro Tem Larry Clark, D-Okolona, to discuss Stumbo’s legislation to permit electronic slot machines at the race tracks.

Stumbo said slots would produce about $700 million in annual gross revenues with $300 million to $350 million going to the state — which faces as much as a $1.2 billion shortfall next year — and the rest after expenses going to increase racing purses and breeder incentives for the horse industry.

The industry contends it is under siege from other states using gambling revenues to increase purses and incentives to draw horses from Kentucky, threatening the survival of Ellis Raceway in Henderson and Turfway Downs in northern Kentucky. Recently, Churchill Downs announced it’s reducing its race days.

Stumbo and Clark want the legislation to be part of the agenda for any special session the governor calls to deal with the state revenue shortfall, but Beshear said, “I haven’t made any decision on that yet.” He said the same thing about endorsing Stumbo’s bill.

He said the industry employs 100,000 people and has a $4 billion annual economic impact. He said he didn’t want Kentucky to lose its designation as the horse capital of the world.

“This is one of our signature industries and we cannot afford to allow this industry to go into serious decline,” Beshear.

Stumbo said the bill is more reaction to threats to the horse industry than a fix for the state’s revenue problems. Even should the legislation pass during a special session this summer, Stumbo said, it might not help with the state’s revenue shortfall because it’s likely to face court challenges.

“I don’t think it’s a solution to balance the budget,” Stumbo said at one point. “What it is is a mechanism to save our racing industry, and, yes, I believe the urgency of their situation requires we do something immediately if we’re going to save our racing industry in this state.”

But Clark said some House members will evaluate the legislation in terms of its impact on the state budget.

“When members see the severity of the revenue forecasting group, they’ll see we’ve got a lot of decisions to make,” Clark said.

Stumbo said he saw little support in the House to increase taxes and without more revenue, those decisions Clark talked about will include further and potentially deep cuts to state spending.

Stumbo and Clark expect Beshear to wait for projections on the size of the shortfall from a group of economists on the Consensus Forecasting Group which meets Monday and again on May 29 before calling a special session.

Stumbo thinks the bill’s chances in the Democrat controlled House “are relatively good.” But Senate President David Williams, R-Burkesville, opposes the measure. Stumbo said the Senate may look more favorably on it, however, if it holds hearings as the House previously did.

Beshear said he plans to talk with Senate leaders as well as continuing discussions with House leadership. The three said they also discussed tax reform ideas proposed by Rep. Bill Farmer, R-Lexington, and Rep. Jim Wayne, D-Louisville, but took no position on that question.

Stumbo said House budget chairman Rick Rand, D-Bedford, has asked Senate budget chairman Charlie Borders, R-Grayson, to hold joint committee hearings on those proposals during the interim.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com.

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