Massachusetts is in the middle of a budget crisis. So why is it still subsidizing out-of-state horse owners?

Share on Facebook
Share on Twitter
Share on
LinkedIn
+

In 2021, the Massachusetts legislature will consider raising taxes on corporations and wealthy individuals to finance social services in the Commonwealth during a challenging budget season. Proponents claim such an approach is necessary to avoid cuts to crucial services like healthcare and education. 

Meanwhile, there are a number of state government programs that defy sound fiscal sense. Unlike raising taxes on the wealthy, it’s often politically difficult to cut these programs because a small group of people depend on the subsidies they provide for their livelihoods, paid for by the rest of the populace.

Take the horse breeding industry as an example. A recent update to MassOpenBooks.org, a government transparency data tool operated by Pioneer Institute, shows that Massachusetts has spent over $80 million subsidizing race horse owners since 2014 via the Race Horse Development Fund. The fund, established in 2011 to try and save a dying industry, received a large influx of money at around the time Plainridge Park Casino opened in Plainville. Race horse owners have lamented competition from other forms of gambling for decades, and at Plainridge the Commonwealth granted them 9 percent of gross gaming revenues in mitigation. The Race Horse Development Fund went on to weather a round of budget cuts in 2017 unscathed. That same budget cycle, state lawmakers cut funding for a program providing shelter to homeless children, Medicaid and, ironically, a gambling addiction rehab initiative. 

Get our MassWatch updates!

More recently, similar programs in other states have come under fire for their wastefulness. Pennsylvania Governor Tom Wolf proposed a $200 million cut from that state’s Horse Racing Development Fund in April after it became clear that the pandemic would create state budget woes. Prior to this decision, the Horse Racing Development Fund received more annual revenue than the Pennsylvania Department of Agriculture or the Department of Health. 

While Massachusetts doesn’t have as pervasive a horse breeding subsidy as Pennsylvania, cutting funds for the Race Horse Development Fund and similar special interest programs should certainly take priority over enacting additional taxes, which could wind up harming an already fragile economy. Instead, Massachusetts could use the fund’s money to help supplement its General Fund or, better yet, redirect the money to local government aid, which has historically been vulnerable to budget cuts during recessions.

Moreover, eliminating the Race Horse Development Fund could rival implementing the proposed millionaire’s tax in progressivity. The Fund has drawn ire in the past for being used chiefly to pay wealthy horse owners their winnings from races. Consider also that most of the state Race Horse Development Fund’s money comes from Plainridge Park Casino tax revenues, and low-income people tend to spend more of their income on gambling than the wealthy do. 

It’s also highly likely that most of the Race Horse Development Fund’s beneficiaries don’t even live in Massachusetts. The Standardbred Owners of Massachusetts, the organization that administers Plainridge Park’s $1.8 million Sire Stakes, has 67 members as of 2017, of which only 30 are Massachusetts residents. Meanwhile, 30 percent of the Race Horse Development Fund is earmarked for thoroughbred breeders, despite the fact that the last thoroughbred racing track in New England is now slated to become a massive real estate development.  

All of that said, even eliminating the Race Horse Development Fund entirely would barely make a dent in the state’s projected $2-8 billion budget deficit for Fiscal Year 2021. The Massachusetts Legislature undeniably is facing some painful decisions in the near future. If raising more revenue is truly a necessity going into Fiscal Year 2021, the millionaire’s tax, despite being unsustainable and likely counterproductive, starts to look more appealing. But before lawmakers make these tough decisions, they should make an easy one: stop earmarking taxpayer money for tiny special interest groups with a negligible impact on the state economy. 

See what other special interest groups and corporate vendors are getting state money at MassOpenBooks.org.  

Andrew Mikula is a Research Assistant at the Pioneer Institute. Research areas of particular interest to Mr. Mikula include land use issues, the cost of living, and tax and regulatory structures. Mr. Mikula was previously the Lovett & Ruth Peters Economic Opportunity Fellow at the Institute. He has a B.A. in economics from Bates College.

Read More:

Mayor Wu’s Commercial Property Tax Proposal: A Solution or a Snuff?

Boston Mayor Michelle Wu is considering shifting more of the…

The Necessity of Transparent Tax Revenue Reporting: MA Provides a Shining Example

Revenue collections, predicted revenue, and expenditures are among the most important data points states report. Without accurate predictions and regular reporting, the legislature and governor's office may go over or under budget, potentially leaving citizens and policymakers in the dark about the fiscal health of the state. For this reason, all states regularly report those numbers and update estimates based on trends, overall economic conditions, and expected changes as a result of new state policies. However, even among the New England states, the transparency and accessibility of such reporting varies greatly and, as a result, limits analysts’ ability to meaningfully compare state revenues and judge performance in real time.

Middlemen Pushing Up Retail Costs of Drugs

The reality is that non-price factors, including several players, are causing net prices to decline and retail prices to increase. Those players include employers, health plans, and pharmacy benefit managers (PBMs), all of whom have continuously circumvented the system through loopholes and complicated systems of reimbursement that tend to hurt patients

Milton Shuts the Door
on Multifamily Housing Plans

The MBTA Communities Act, passed in 2021, provides that the 177 communities serviced by the MBTA must create multifamily zones to spur housing development close to public transportation. But the issue is an emotionally charged one, with passions high on both sides. And Milton residents in February rejected a plan to create such housing ‚ choosing a loss of some state funding over an approximately 25 percent increase in their housing stock, along with the possibility of greater congestion.

State Overtime Expenditures Jump, Even as Employment Increases

A new analysis of state payroll expenditures reveals a sizable increase in overtime expenditures, even as the state has added nearly 3,000 new employees since the beginning of the pandemic.

‘High’ U.S. Drug Prices Mask Freeloading by Other Nations

The drug company’s choice is to walk away from millions in revenue from a given country and deny their people a lifesaving drug, or swallow hard and accept an unfair price that is nowhere near the drug’s value. For the sake of shareholders and patients, drug companies typically accept the unfair price and devote the revenue to offsetting their previous investments. In short, other nations are freeloading off of American R&D.

My Musings on Massachusetts’ Fiscal Picture

Since the start of FY2024 on July 1, 2023, the state has experienced six straight months of revenues falling short of expectations. The single biggest factor is the unprecedented growth of the state budget since FY2021. The $15 billion increase in state spending contextualizes the seemingly modest projected revenue growth of 1.6 percent for FY2024 by highlighting that the base is very inflated.

Studying the Humanities in the 2020s

At a time of tumultuous and sometimes vitriolic debates on American campuses, here are seven guiding principles to help college student thinking about studying history or any other humanities subject.

Better Civics Education Is the Massachusetts Way

The fight for more comprehensive civics education in the Bay State has persisted for years. The Legislature's recent override of Gov. Maura Healey’s cut to the state’s modest civics instruction budget suggests that in many in Massachusetts — including parents, teachers, and lawmakers — support strengthening the state’s civics and history curriculum, particularly with mounting evidence of declined student performance across the country.

Except in Florida, There’s Really No (High School) Debate

In much of the country, the state of America’s High school debate is not strong. Teachers and education professionals have become indoctrinated in an identity-obsessed, grievance-seeking body politic. But in Florida, students must thoroughly research debatable positions and are actually expected to engage with those who disagree.