When bad news can be good news
Barack Obama and supporters of slot machines in Maryland share a perverse, common bond: Each is riding to victory — in landslide fashion — on the back of a nationwide recession of monumental proportions.
Bad economic news is the best possible development for Obama and his fellow Democrats. Retaking the White House and picking up huge majorities in Congress look highly likely. Republican hopes are sinking as fast as the swooning stock market.
The same holds for opponents of slot machines in the Free State. The prospect of hard economic times has virtually doomed them to defeat on Election Day. What might have been a closely contested ballot question is turning into a rout.
Recent polls by the Washington Post and a pro-slots coalition came to the same conclusion: Slots could pass with 60 percent or more of the vote. The gap in these polls is a yawning 25 or 26 percent. That's way too much to make up between now and Nov. 4.
Foes of slots are being outspent 9-to-1. They don't even have a TV advertising campaign. Even worse for them, the economic rationale for slots is becoming stronger every day.
No one claims slots revenue will erase Maryland's growing, billion-dollar-plus deficit. But big, painful budget cuts to social programs, local governments and employment are coming. Those reductions could continue for two or three years. And without an infusion of money from 15,000 "video lottery terminals," those cuts will be even deeper and more hurtful to Marylanders in need.
Voters now recognize the inevitability of higher taxes if slots aren't approved. In the Post poll, 78 percent of likely voters said they thought no slots would mean cuts in state school aid, 81 percent felt there would be cuts in other worthwhile programs, 71 percent felts local aid would be reduced and 83 percent said rejection of slots would lead to more taxes.
The anti-slots crowd has yet to offer convincing arguments to counter the lopsided public view that slots are part of the solution, not part of the problem.
Comptroller Peter Franchot, the loudest anti-slots voice, has tried repeatedly to demean slots backers and demonize the one-armed bandits. Evil is coming Maryland's way, he predicts.
Yet Franchot has never laid out a comprehensive economic plan for surviving the recession without slots. Where would he find $1 billion to $2 billion in budget cuts or tax increases? Franchot refuses to tell us. He complains but he doesn't contribute to finding a solution.
Recently, anti-slots leaders pointed to a study by UMBC professors to support the view that slots will be ruinous for Maryland. This study, paid for by a national anti-slots group, maintains there could be a net negative economic impact of as much as $600 million from slots — wiping out all the state's revenue gains.
But the study received scant attention. The numbers just are not believable. Similar doomsday forecasts proved wildly off-base in Delaware, West Virginia, New Jersey and most recently in Pennsylvania. The study's validity was further undercut by this sentence on the last page of the report: "All estimates utilized within this analysis are riddled with uncertainty…"
There's no question slots backers are being optimistic in predicting $660 million in new state revenue will come Maryland's way in 2013. Only a small amount of slots revenue — from one-time license fees — will be generated soon enough to help lower the state's deficit for next year. Those fees could bring in $90 million.
But every new revenue source helps when the state is facing its biggest budget shortfall in many decades.
Getting Maryland's slots industry off to a quick start after the election will be critical if Gov. Martin O'Malley wants to reap maximum, early benefits from these electronic machines that the State Lottery Agency will own and operate. That won't be easy because the highly restrictive slots law passed last year imposes numerous roadblocks.
The recession easily could throw O'Malley's desire for a quick start for a loss. For instance, the winning bidder for the slots site in Anne Arundel County must fork over $22.5 million immediately and invest a whopping $237.5 million in new facilities or upgrades. The winning Cecil County bidder will need to find $140 million and the winning Baltimore city bidder will have to plunk down $210 million.
Finding gaming corporations with access to that kind of money in the middle of a severe credit crunch won't be easy. There could be long delays in building some of these gaming facilities — and cashing in on the operation.
So while you can probably bet on slots winning big come Nov. 4, you might want to place a side wager on a longer than expected slots phase-in period in Maryland. The twists and turns in this melodrama keep coming.
Barry Rascovar is a longtime State House columnist and communications consultant. His address is brascovar@hotmail.com