The West Virginia Lottery Commission has reversed its decision of a couple weeks ago that the Jefferson County Commission and our county's five municipalities would not be getting any money from table games at the Charles Town Races.
The decision to withhold the funds was itself a reversal of a decision made earlier this year that such funds were coming. The municipalities and the county had adopted budgets presuming the availability of the money. The news that it might not be forthcoming produced great anxiety among the county commissioners, mayors and councilpeople.
A few trigger-happy naysayers chastised Jefferson County's legislative delegation for its failure to deliver the expected funds. Given the swift and easy resolution of the problem in Jefferson County's favor, such criticism would appear to be unwarranted.
The funds in question came from the so-called "better deal" table-games bill passed by the Legislature in 2009. That bill provided that once all four counties with horse- or dog-race tracks had voted to permit table games, the percentage of money going to local governments in those counties would increase. Jefferson County was the only one of the four counties that had not passed table games at the requisite referendum (We turned them down in 2007).
This bill was an attempt to "sweeten the pot" for Jefferson. Jefferson County schools were to get about 2.5 percent of net table revenue in the original table-games bill - no money was to go to county or municipal governments. Under the better-deal bill, Jefferson County would get 5 percent of net table revenue. Our county's schools would get 3 percent of net table revenue, county government 1 percent and the five municipalities were to divide another 1 percent by population.
Similar increases were to take effect in the other three counties, except no money was to go to schools in those counties. All their table-games money went to county and municipal governments in the original table-games law, and that did not change with the better-deal bill. The bill passed and Jefferson County voters ratified table games in 2009.
I wrote the original version of the better-deal bill, and introduced it in the House of Delegates. The logic behind its provisions was that the Charles Town racino was expected to bring in as much money from table games as the other three racinos together. A "racino" is a racetrack with a casino. Even with the additional money going to all four counties instead of state government, the state's percentage was still so high that it would get many millions more if Jefferson County voters passed a table-games referendum.
State Sen. Herb Snyder introduced the same bill in the Senate a couple of days later. He then persuaded the Senate leadership (principally Senate President Earl Ray Tomblin, Judiciary Chair Jeff Kessler and Finance Chair Walt Helmick) to take up the bill for passage.
The Lottery Commission wanted some changes in the language of the bill. Sen. Snyder worked with them to make sure that changes in language did not result in any change in substance.
Secretary of Revenue Virgil Helton wanted the new revenue distribution formula to take effect the beginning of the fiscal year after Jefferson County voters OKed table games. This made sense. The Legislature normally makes changes in tax law effective on the first day of a new fiscal year, so the Department of Revenue can make all the necessary adjustments to its computers then. The Lottery Commission is one of the agencies under the Department of Revenue.
The language agreed upon said that the new distribution would take effect "in the fiscal year immediately following the issuance of a table games license" to Charles Town Races. Charles Town Races might have been able to open some tables in the last month or so of the 2010 fiscal year, but chose to wait until the 2011 fiscal year, which began this past July 1. The license was issued to Charles Town Races about one minute after midnight on July 1. Herein lies the dispute.
Is the current fiscal year the one "immediately following" the issuance of the license, or would that be FY 2011? If the latter is the case, then the extra money would not start flowing to Jefferson and the other three counties until July 1, 2011.
Secretary Helton, who wrote the language in question and who is himself a lawyer (he was formerly the attorney for the Lottery Commission) was on vacation when the Lottery Commission reversed itself the first time. He returned on Aug. 25 and the Lottery Commission went back to its original interpretation on Aug. 26.
One piece of information that helped clear up the confusion was that the Lottery Commission issues table-games licenses annually. Every racino gets a new license effective at the beginning of each new fiscal year.
I do not blame Charles Town Races for this flap. The racino made a sensible business decision to wait until the beginning of the new fiscal year to open. State law makes a racino pay $1.5 million for its license in the first year of operation and $2.5 million each year thereafter. Charles Town Races legally saved itself $2.5 million by waiting a few weeks to open.
This language was written presuming each track would most likely open its tables for the first time sometime during a fiscal year. With 20-20 hindsight, we should have provided that the license fee be prorated daily, weekly or even monthly.
Some say Jefferson County should have ratified table games in 2007, and taken the pittance of revenue the state was giving us. That makes no financial sense. Moreover, we got much more by standing up for ourselves than the extra revenue. We got the rest of the state to pay more attention to our justified complaints that we in Jefferson have been mistreated in much of state law. And we got more respect, because we were willing to take a risk.
The better-deal table-games bill was followed by the passage of a better-deal bill for our horsemen and a critically important bill that mandates a cost-of-housing study. This latter will strengthen our cases for better pay for education and state employees and reforming the real estate property tax based on the higher cost of housing here in Jefferson than elsewhere.
I'm convinced we made the right decision on table games in 2007 and the right one in 2009.