Is Wolf’s Plan To Raid Trust Fund For Scholarships Beating A Dead Horse?

Posted on April 1, 2020

Gov. Tom Wolf’s Feb. 4 budget proposal to take $204 million annually from the Race Horse Development Trust Fund to pay for 25,000 university scholarships appears stuck in the gate.

Maybe it’s beating a dead horse since his plan has not found political support even within his party over the past two months.

Wolf’s last public comments on his proposal came on March 4 as he toured two state universities whose students could benefit from his plan.

A leading Democrat breaks with Wolf over horse fund

On Tuesday, Lindsey Williams, a prominent state senator in a leadership role on the committee that most often oversees gaming legislation, said she could not support Wolf’s plan to take money from the horse race trust fund to pay for scholarships.

That does not bode well for the governor’s proposal.

Williams explained her position to PlayPennsylvania:

“While Gov. Wolf’s scholarship fund would provide opportunities to some students, I am not in favor of pulling that scholarship money from a fund that families rely on for their livelihoods. Rather, we should look for ways to invest in the state system that would lower tuition costs for all students and address equity issues throughout the system.”

She did, however, note the importance of increasing funding for higher education.

No Democrat has stepped forward to sponsor legislation

Any legislation would need bipartisan support and an affirmative vote ahead of the June 30 budget deadline to move ahead and become law.

No Democrat, the minority party in both houses of the PA Legislature and the governor’s political party, has stepped forward to sponsor legislation necessary to withdraw money from the horse trust fund.

Or as Wolf put the plan in his address:

“Let’s bet on our kids instead of bankrolling racehorse owners and ensure the viability of the Pennsylvania state system of higher education.”

But to become more than a catch-phrase, the legislation would need to get sponsored and written. Typically, a fellow Democrat would sign on to carry Wolf’s spear in the legislature. That has not happened.

A request for comment from the Wolf administration went unanswered this week.

Rep. Frank Dermody, the leader of the state House of Representatives’ Democratic Caucus, also did not respond to a request for comment on support for the governor’s proposal. The veteran legislator represents parts of Allegheny and Westmorland counties near Pittsburgh.

Republicans have historically supported horse racing

Given the history, Republican support always seemed unlikely.

In 2004, Republicans from rural and agricultural areas of the state had championed the horse racing industry with a set aside of about 10% of casino slot revenues to offset losses of money spent at PA racetracks.

In return, urban Democrats got casinos approved. Following a subsequent series of financial raids on the horse fund, the money stream from casino slot revenue went into a trust fund beginning in 2017.

Wolf signed the trust fund law.

Republican opposition

Republican state Sen. Tom Killion, the chairman of the Community, Economic & Recreational Development Committee, has voiced opposition to the governor’s plan from the outset.

And that has not changed for Killion, whose district includes Chester County, home to horse farms and the world-famous New Bolton Center, a University of Pennsylvania veterinary hospital.

Killion told PlayPennsylvania this week:

“Horse racing sits at the nexus of Pennsylvania’s two largest industries – agriculture and tourism. Diverting monies from the Race Horse Development Trust Fund would effectively kill the horse racing industry, which includes breeders, stables, veterinarians, provides thousands of good, family-sustaining jobs and pumps almost $70 million into state tax coffers every year.”

And while Republican support was always unlikely, to date, no Democrat has publicly stepped up to carry the ball for Wolf’s proposal.

Williams supports scholarship idea, but not the funding source

Williams now appears to be the first Democrat to voice opposition to the way Wolf proposes to pay for his scholarship proposal.

Significantly, she is the minority leader of the Community, Economic & Recreational Development Committee, which generally oversees gambling matters. Her district includes Pittsburgh and several suburbs.

In answering PlayPennsylvania, Williams took pains to explain that she, in general, supports the governor’s proposal to funnel money to state higher education, while also benefiting students and parents.

But she doesn’t support using the horse trust fund to accomplish that goal.

“We know that 60% of our current workforce requires some post-secondary degree or certification to meet employer needs, but only 47.5% of Pennsylvanians meet those requirements—we simply aren’t credentialing enough students to meet even our current workforce needs, let alone our future needs.

“Currently, Pennsylvania ranks 47th in the country in funding our (state higher education system) schools. If we raised our funding even to average levels, we could reduce tuition by about 22%, which would decrease student borrowing costs and allow lower-income students greater opportunities to access educational opportunities that are currently inaccessible to them.

But PA has an interesting history of passing a last-minute budget

COVID-19 precautions have included shutting down all horse racing in the state, as well as closing all casinos.

A Democrat who asked not to be identified cautioned that losing these significant sources of revenue the state regularly counts on has “changed the budget cycle. The landscape has changed.”

That and the state’s history of often bizarre 11th-hour deal-making for the budget makes predicting budget actions difficult.

Jim Marshall, a Republican who chairs the PA House of Representatives Gaming Oversight committee, said tapping the trust fund, given the effects of the coronavirus on the state, would be “an action of the last resort.”

Even if some sort of legislation moves ahead, a legal challenge from the horse business seems likely, given that the money is held in a trust.

Horse business remains skittish

While the likelihood of the governor’s proposal going through seems low, the plan has set off a shockwave in the horse industry.

The state’s Secretary of Agriculture Russell Redding has advocated on behalf of Wolf’s plan through a series of op-eds. Also holding the title of the chairman of the State Horse Racing Commission, Redding’s support of using horse funds for other purposes has left many in the horse business feeling alienated.

The unsettled atmosphere has meant breeders are looking to locate elsewhere, such as Maryland.

Anecdotally, a higher percentage of horses at recent auctions in PA have not met their minimum reserve price amid the uncertainty caused by Wolf and the virus.

Along with the postponement of the Kentucky Derby and racetracks closures across the state, it all adds up to a sloppy track for the PA pony industry.

The equine industry being one of many feeling vast economic effects in the current state of affairs, losing their main source of funding on top of it would likely prove a fatal blow. Most bets would be on that not happening, not this year, at least.

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Kevin Shelly

Kevin C. Shelly is an award-winning career journalist who has spent most of his career in South Jersey. He's the former assistant city editor of The Press of Atlantic City, where he covered the casino industry and Atlantic City government as a reporter. He was also an investigative, narrative enterprise, and features reporter for Gannett’s Courier-Post.

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