FRANKFORT — By RONNIE ELLIS

CNHI News Service

Speaker of the House Greg Stumbo, D-Prestonsburg, wants more money for substance abuse programs, education, even county jails. He doesn’t want to raise taxes to do it.

He said Wednesday he wants to help Kentucky’s “signature industry,” which he and racing officials say is under attack from other states which use gambling to supplement purses and breeding funds.

“I’m convinced if we don’t do something, we’ll see great damage to our racing industry,” Stumbo told the House Licensing and Occupation Committee, which is considering Stumbo’s bill to allow video slot machines at race tracks.

Stumbo contends — citing his own opinion when he was attorney general — that his measure does not require a constitutional amendment because it’s clear the 1891 Constitution only bars state lotteries. Voters in the late 1980s amended the Constitution to allow a lottery. Two other opinions by other attorneys general contradict Stumbo’s ruling.

House Bill 158 would allow tracks to operate video lottery terminals, keeping up to 75 percent of the proceeds for purses, breeding fees, and capital improvements. They would pay a $25,000 license fee for a 10-year license and a $10,000 fee for renewal.

Speaker Pro Tem Larry Clark, D-Okolona, said lawmakers will seek larger license fees, noting how much tracks will benefit from the slots. Stumbo said that’s fine, so long as the fee isn’t so great it inhibits tracks’ ability to secure financing to construct video terminal facilities.

Stumbo also increased his estimate of the revenues the state can generate — he’d originally said slots would produce “conservatively” $700 million annually. But Wednesday, he said that figure would grow to $1.2 billion within five years.

Tracks would keep 75 percent of the first $100 million of revenues and 65 percent of anything over that amount each year. The state would get the remainder and Stumbo wants to use it to replace the state’s portion of motor vehicle tax. The bill does not affect motor vehicle taxes for local school districts and county governments. Stumbo said his bill would reduce taxpayers’ bills by one-third.

His bill would also designate how the remaining state proceeds would be spent, although he characterized that part of the bill as “my preference,” indicating he expects lawmakers may amend those provisions. Under his bill, 15 percent up to a maximum of $20 million a year from the state’s proceeds would go each to substance abuse treatment programs and to county jails. Another 4 percent or a maximum of $2.5 million would go to help problem gamblers and 1 percent or a maximum of $1 million to litter cleanup efforts.

The rest would be allocated to the Kentucky Department of Education. The education component would grow as revenues increased over time — the other categories are capped.

The jails proposal has the support of Bob Arnold, executive director of the Kentucky Association of Counties, and Vince Lang, executive director of the County Judge/Executives Association. Lang said counties now devote between 20 percent and 50 percent of their general fund receipts to subsidizing jail costs on average. County jails are running an aggregate deficit of $130 million, he said.

“At least this bill provides some funding,” Lang said afterward, noting counties have for years begged the legislature for relief. “The $20 million is not $130 million, but it goes a long way to help.”

Nancy Jo Kemper, executive director of the Kentucky Council of Churches, and Martin Cothran, spokesman for Just Say No to Casinos, said voters expect a constitutional referendum on any expanded gambling measure. Kemper said slots will cut lottery sales by 10 percent and hurt charitable gambling even more. Cothran said if lawmakers pass the bill without a constitutional referendum it will be overturned by the courts.

Keeneland’s Nicholson, however, said other states are using gambling to supplement purses and trying to lure Kentucky’s horse industry away.

“Kentucky is on the verge of being overtaken by other states,” Nicholson said. “We’re asking for your help to help us fight back.”

The committee took no action on the bill. Chairman Dennis Keene, D-Wilder, said the committee will hear testimony on the bill from all sides and likely vote on it in February.

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