New York came a step closer last week to securing a one-time payment to help balance its budget when Gov. David Paterson announced a favored bidder to run a video lottery terminal facility at the Aqueduct Racetrack in Queens, N.Y.
However, Senate Majority Leader Dean Skelos, R-Rockville Center, criticized the bid, which requires approval by the Senate, Assembly, and governor.
New York plans to sell $250 million of bonds backed by state personal income tax in fiscal 2010 to construct the VLT facility, also called a "racino," said Division of Budget spokesman Matthew Anderson. The state would retain ownership rights to the facility.
A government source said the bonds would be issued by the Empire State Development Corp., though Anderson said a decision about which issuer would sell the bonds hasn't been made yet.
The fiscal 2009 budget is counting on a $250 million payment for the rights to build and operate the VLT facility. Paterson announced his preference for a $370 million bid by Delaware North Cos. over lower bids by SL Green Realty Corp. and Capital Play Inc. on Friday, citing Delaware's experience as a partner in operating other such facilities in the state.
Though the facility is expected to produce recurring revenue when completed, the payment is a one-shot in the current year budget.
"Most governments have one-shots in their budgets from time to time," said Standard & Poor's managing director Colleen Woodell. "New York has made a conscious effort to reduce the number of one-shots over the years. But given the current revenue situation, we certainly anticipated that some of the one- shots would come back."
According to state budget documents, revenues from the state's video gaming facilities, including a one-shot $250 million payment, was projected to be $764 million in the current fiscal year. The Division of Budget projected that VLT revenues would decrease by $120 million in fiscal 2010 and then increase by $243 million in fiscal 2011. The state anticipates the facility will begin its operations in fiscal 2010. The state also expects a VLT facility to come online at the Belmont racetrack in Long Island in fiscal 2011.
Skelos and Paterson's office traded barbs over the selection of the bids.
"Unlike the other bids, Delaware North's plan does not include an economic development proposal that would be a greater benefit in the long run," Skelos said in statement on Friday.
Paterson spokeswoman Risa Heller said in a statement that any delay would hurt the state during a time of financial crisis.
"We must work together to ensure that we maintain the integrity of the state's finances instead of allowing political interests to undermine our fiscal health," she said.
