Andrew Mikula

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

/0 Comments/in , , /by Andrew Mikula
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:

HDIP: Unintended Consequences Adding to the Housing Crisis

See how the HDIP affected the state's housing crisis. Housing prices in Gateway Cities, such as Chelsea, Revere, Everett, and Lawrence, are skyrocketing.

Large Free Cash Fund in Woburn Demonstrates Quality Financial Management

Woburn has consistently had quality financial management in recent years, demonstrated by the fact that the city had the third highest free cash fund in the state in 2020. The city’s financial success has benefited its taxpayers, as the city’s bond rating has been promoted to a AAA rating by the S&P agency standards.

Can Massachusetts Reverse the Decline in U.S. History and Civics Performance?

Massachusetts — home to so much history, including seminal events such as the Boston Tea Party — has much to be proud of in its own students’ history and civics performance. Even as policymakers have supplanted typical curricular standards with “engagement” mandates that students participate in progressive activism, national attitudes towards Massachusetts’ civic education have remained envious.

Cheap, Efficient, Effective: The Lessons from the PVTA and WRTA

The MBTA is recognized as one of the best transit systems in the nation. It's not perfect, however: comparisons to other Massachusetts transit systems can indicate the MBTA's flaws and highlight the regional authorities' strengths.

The Massachusetts Lottery Seeks Expansion

The Massachusetts Lottery is once again expanding, offering a new $50 dollar scratch ticket. Members of the House and Governor Healey have also backed a proposed FY24 budget provision creating an online lottery, or iLottery. While these measures are predicted to boost the state's revenue and ability to provide local aid, state legislators should ask themselves whether these new changes represent sound public policy and align with other policies goals.

Fare-Free Public Transit in Boston: A Holistic View

In recent years, ridership on bus routes which run through low-income areas has increased due to programs which have eliminated fares on those routes. With some politicians looking to expand this to all Boston transportation, it is important to remember that while public transit is good for society, it is not a public good.

Boston’s Budget: Wu and City Council Debate

Learn more about the details of the latest Boston operating budget proposal. Mayor Wu and City Council debate on specifics of the bill, such as cuts to different services vital to the city.

Charter School Success: Importance in Suffolk County and College Enrollment

Learn about how charter schools set students up for success, especially in urban areas like Suffolk county. MCAS scores and college enrollment are stats that point to the impact of Charter schools.

A Bird’s Eye View: Massachusetts K-12 Education by County

Massachusetts has had the best public school system in the country for the past two decades: along with some of the highest per pupil spending as well. Among the counties, does high per pupil spending translate to better results? The short answer: not really.

PFML v. FMLA: To Pay or Not to Pay Leave-Takers

Congress passed the Family and Medical Leave Act in 1993 to ensure citizens’ job security should they need to take an extended leave, but it did not require any replacement wages to be paid for that time period. Then, Massachusetts passed their Paid Family and Medical Leave law in 2018 which set out requirements for employer and employee contributions to a PFML fund so that employees could get paid in addition to keeping their jobs should they need to take leave for certain reasons.