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:

AEI’s Robert Pondiscio on E.D. Hirsch, Civic Education, & Charter Public Schools

This week on “The Learning Curve," Gerard Robinson and guest co-host Kerry McDonald talk with Robert Pondiscio, a senior fellow at the American Enterprise Institute. He shares his background working with curriculum expert E.D. Hirsch, Jr., who has emphasized the importance of academic content knowledge in K-12 education as well as civic education to develop active participants in our democracy. Pondiscio explains some of the findings of his book, How the Other Half Learns, on New York’s Success Academy charter schools network.

Hubwonk360 Video: If we tax them, will they leave?

In this brief, six-minute video, Pioneer Institute Executive Director Jim Stergios and Director of Government Transparency, Mary Z. Connaughton, walk through an amendment to the Massachusetts constitution that could dramatically increase the income tax on retirees and small businesses.

A Decade of Culture and Recreation Spending on Cape Cod

0 Comments
/
Culture and Recreation are among the most important services…

A Decade of Police Spending on Cape Cod

0 Comments
/
Police spending is often the subject of debate in town halls…

Barnstable County: What Towns Tax the Most?

0 Comments
/
The housing market has been the center of American economic growth…

As States Compete for Talent and Families, Massachusetts Experienced a Six-Fold Increase in Lost Wealth Compared to a Decade Earlier

With competition for businesses and talent heating up across the country, in 2020 Massachusetts shed taxpayers and wealth at a clip six times faster than even just a decade ago. Between 2010 to 2020, Massachusetts’ net loss of adjusted gross Income (AGI) to other states due to migration grew from $422 million to $2.6 billion, according to recently released IRS data now available on Pioneer Institute’s Massachusetts IRS Data Discovery website. Over 71 percent of the loss was to Florida and New Hampshire, both no income tax states.

David Ferreira & Chris Sinacola on MA’s Nation-Leading Voc-Tech Schools

This week on “The Learning Curve," co-hosts Cara Candal and Gerard Robinson talk with Chris Sinacola and David Ferreira, co-editors of Pioneer’s new book, Hands-On Achievement: Massachusetts’s National Model Vocational-Technical Schools. They share information from their new book on the story of the Bay State’s nation-leading voc-tech schools, and how accountability tools from the state’s 1993 education reform law propelled their success.

Property Crime Rates and Motor Vehicle Theft in Eastern Massachusetts Cities

0 Comments
/
An article published in May by WBUR shined a light on the recent…