6/18/2014 2:45 PM
By By Mark Scolforo Associated Press
HARRISBURG, Pa. (AP) - Pennsylvania's elected financial watchdog sounded a note of concern Wednesday about the financial viability of a public fund that pays to regulate the state's horse racing industry.
Auditor General Eugene DePasquale said the State Racing Fund faces increasing challenges and steps should be taken to keep the racing industry from what he described as significant jeopardy.
A report by DePasquale's agency concluded the state Agriculture Department took $873,000 from the fund over three years to plug budget holes and spent about $5 million over four years for personnel costs that lacked appropriate documentation.
"Without proper documentation, we have no assurances that the amount charged to the State Racing Fund is accurate and appropriate," he said at a state Capitol news conference. "In my view it is unacceptable and must change."
As one example, he said the department used $177,000 from the fund to pay for a special adviser to assist Gov. Tom Corbett on horse and harness racing issues, as well as to serve as the governor's liaison on issues facing farmers and rural residents. The person holding that job is Barron L. "Boots" Hetherington, a Schuylkill County farmer and former Penn State trustee.
Agriculture Secretary George Greig responded by saying that regulating the industry has become increasingly expensive while track wagering has been on the decline.
"The regulatory obligations of the Department of Agriculture in fulfilling its duties under the Racing Act increased well in excess of 50 percent with the advent of slots and table games in Pennsylvania," Greig wrote. "While the Gaming Act brought a virtual fountain of tax revenue to many stakeholders, the Department of Agriculture received nothing except three additional racetracks to license."
Greig said it was not correct to claim his department uses the racing fund simply to balance its budget, a practice DePasquale said was an abuse of authority. Agriculture spokeswoman Samantha Elliott Krepps said the transfers from the fund have been legal.
Krepps said the fund needs to generate about $18 million to pay for related costs, but in recent years, that figure has been closer to $11 million. Its revenue comes from wagering, uncashed tickets and other sources.
The Race Horse Development Fund, a separate entity that draws revenue from the state's casinos, has generated more than $185 million for the state's general fund since 2010, DePasquale said.
DePasquale said the state currently has about 550 horse breeders in 40 counties and is home to six tracks. His report recommended the state update licensing fees, find new sources of revenue and prohibit the Agriculture Department from using money from the State Racing Fund to plug budget holes or to pay for personnel not directly related to the horse racing industry.