Murphy Proposes Gutting $20M Racing Subsidy as New Jersey Deals with COVID-Caused Budget Deficit
Posted on: August 29, 2020, 06:52h.
Last updated on: August 31, 2020, 07:39h.
Staring at a budget deficit of about $5 billion thanks to the COVID-19 crisis, New Jersey Gov. Phil Murphy (D) sent legislators a revised spending plan for the 2021 fiscal year earlier this week. The plan contained more than $1 billion in spending cuts, and among the programs targeted is a purse subsidy for New Jersey’s horse racing industry.
Murphy’s plan removes the $20 million set aside for the initiative that has helped Monmouth Park, the Meadowlands, and Freehold Raceway bolster purses and increase races.
Last year was the first year for the program, created by state law to support the New Jersey racing industry. It’s meant to run for five years. Still, given the fiscal uncertainty, there’s no guarantee the subsidy will be restored — either for the 2022 fiscal year or possibly this year, if the state receives federal funding in a COVID-19 relief bill Congress has been debating.
“Due to the historic fiscal crisis, the Governor was forced to make a number of cuts in his revised budget proposal,” Melinda Caliendo, public information officer for the New Jersey Department of Treasury, told Casino.org.
It is too early to make any spending commitments for the next fiscal year, and the administration would need to know more about the amount and flexibility of additional federal funds before making plans,” Caliendo told Casino.org.
On Wednesday, Dennis Drazin, chairman and CEO of Monmouth operator Darby Development told Casino.org it was “premature” to comment.
Subsidy Spurred Racing Gains
Meadowlands officials have touted the $6 million it received from the program, allowing the famed New Jersey harness racing track to run 1,163 races in 2019, nearly 200 more races than the year before. Even with the substantial increase in races, entries per race went up from 8.4 to 8.9.
Not surprisingly, as the number of races and entries increased, so, too, did the handle. The $217 million wagered last year was 26 percent better than the $172.4 million in 2018.
The Meadowlands did not respond to a request for comment.
Monmouth Park reported big gains in handle last year and went from $176 million in 2018 to $205.5 million last year. And that increase came even though the thoroughbred track’s signature event, the Haskell Invitational, saw its card nearly cut in half because of excessive heat. Drazin, too, credited the subsidy for the gains the Oceanport track reported.
Budget Slashes Revenue Projections
Besides the racing subsidy, the only other gaming-related cut in Murphy’s revised budget proposal appears to eliminate an Atlantic City Tourism program. That will produce savings of $217,000 for New Jersey over the nine-month period the revised budget would cover. That period starts in October.
Though, the new spending plan does change some revenue figures, both for the 2020 fiscal year that’s been extended by three months and the shortened 2021 year.
Murphy’s original 2020 budget initially projected $290.7 million in casino revenue for the state. This week, that total has been cut by nearly $30 million to $261.3 million. For 2021, Murphy’s plan slashes casino revenue by almost $50 million. The initial projections called for New Jersey to get $308.9 million. But now his administration expects the Atlantic City venues to produce just $259.6 million.
The administration is rosier on sports betting. The state’s general fund will reach $19.7 million for 2020, a $1.5 million increase from last year’s projection. Murphy initially projected the general fund to get $19.2 million for 2021. Even with the budget cycle shortened to nine months, he expects New Jersey’s general fund to get $23 million in the new spending plan.
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