4014
VETOES
854.
This bill provides that, beginning with the calendar
year 1976 and for a period of three consecutive calendar
years thereafter, the tax of 5 1/2% levied pursuant to
Article 78B, Section 16(a) of the Code upon the half mile
race tracks shall not be paid by the Timonium Race Track.
Instead, the amount of this tax shall be available to
Timonium for purposes of making capital improvements
approved by the Racing Commission.
The effect of this bill is an estimated loss to the
State of over $4,500,000 in general fund revenue and over
$285,000 in special fund revenue for the four year
period.
I am advised that the Timonium Race Track does not
have a federal income tax exemption and that it pays
federal income taxes on the profits made by it. This
being so, a significant percentage of the money which the
track would save in deductible State taxes under House
Bill 854 would be paid to the Federal Government in
income taxes.
I am aware that a program to fund capital
improvements for the mile tracks is in operation in
accordance with Article 78B, Section 12 of the Code;
however, there is a significant difference between the
two situations. Under Section 12, the money used to fund
capital improvements at the tracks is deducted from the
amount wagered on races before the track receives its
share. It is then paid to the State and returned to the
track by the State Racing Commission in order to make
improvements authorized by the Commission. No existing
State tax revenues are involved in this arrangement, and
therefore to the extent any such grants are federally
taxable, it is not State revenue paying the tax. Under
House Bill 854, State tax revenues would be abated and
part of them would wind up in the Federal treasury.
I would have no objection to signing a bill
providing benefits to Timonium under an arrangement
similar to that devised for the mile tracks, where the
funds to support the capital improvement program would be
paid from the money bet on the races and not from the
State treasury. I object to an arrangement, however,
where, in effect. State taxes are used in part to
subsidize the Federal Government.
This bill, if signed, would not take effect until
January, 1976, and, as the Timonium meet does not start
until after July 1, it would produce no benefit to the
track until fiscal year 1977. Thus, there will be ample
opportunity for the General Assembly to attain the
objectives of the bill in its 1976 Session. I have been
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