Massachusetts officials must find an alternative to balance the $28.16 billion fiscal 2009 budget as Gov. Deval Patrick's initiative to raise $124 million from casino development, which was expected to help close next year's $1.3 billion budget shortfall, died in the legislature last week.

The governor's fiscal 2009 budget proposal includes $124 million of casino license fees to offset an anticipated decrease in state lottery revenues, with those funds going to cities and towns in the form of local aid. Yet the House Thursday night voted 106 to 48 against Patrick's plan to build three casinos in the state, eliminating the possibility that state could generate revenues from casino development.

Other proposals to tackle the $1.3 billion deficit include $479 million of Medicaid savings, reduced state health care contributions, and other spending controls and closing corporate tax loopholes to gain $297 million. In addition, officials estimate more efficient revenue collections would bring in $166 million.

Along with helping to shore up the $1.3 billion deficit for fiscal 2009, which begins July 1, Patrick has said implementing casinos would bring in $400 million to $450 million of additional revenue every year for the commonwealth. The governor's plan had included dividing those revenues evenly between transportation infrastructure projects and property tax relief for homeowners.

The failed casino legislation was a core project of the Patrick administration, yet Cindy Roy, a spokeswoman for the governor, pointed to the administration's list of bond bills, which total nearly $1 billion, to help boost the state's economy and support needed capital projects.

"The governor appreciates all the legislators who stood with us," Roy said via e-mail. "The governor looks forward to continuing to work with House and Senate leadership to be push our comprehensive jobs creation and economic development agenda, including life sciences, clean energy, broadband expansion, and numerous critical bond bills to fix our crumbling infrastructure and infusing billions of dollars of construction activity into the state."

Massachusetts officials are working on how best to raise additional revenue to help support transportation capital projects as the state faces a $15 billion to $19 billion transportation infrastructure shortfall, according to a report release one year ago by the Transportation Finance Commission, a panel selected to evaluate the cost of bringing the state's transportation infrastructure to a state of good repair.

While Massachusetts currently does not have casinos, its residents are gambling at neighboring states' casinos. Last year, commonwealth residents spent $1.1 billion at Connecticut casinos and Rhode Island slot parlors, contributing more than $233 million of tax revenues to the two states, according to a 2008 New England Gaming Update. The Center for Policy Analysis at the University of Massachusetts at Dartmouth conducted the study and released the results on Monday.

For now, casino development is off the legislative table, but lawmakers are working on other plans to help generate more funds for the state coffers. One proposal is to add 2,500 slot machines at each of the state's four racing facilities. Massachusetts has two horse racing parks and two greyhound tracks.

Rep. David Flynn, D-Bridgewater, sponsored the legislation to implement slot machines at the parks, and said that adding gaming machines to the four tracks will help boost the state's racing industry and could bring in $400 million annually for the commonwealth, along with a $50 million licensing fee.

"The main thing is that I think casinos are going to happen someday, but I'm just trying to build a bridge to them to save the existing jobs at the four tracks and to give the revenue that we so badly need in the interim," Flynn said.

Whether potential slot-machine revenues could help balance next year's budget remains to be seen, as lawmakers would need to pass the measure as they consider the fiscal 2009 budget. The slot-machine bill is currently in committee and could receive a public hearing within the next two weeks, according to Dan Sullivan, Flynn's chief of staff.

Yet Flynn said he was "doubtful" that his proposal would pass in time to assist next year's fiscal plan, but stressed that once authorized, it only takes 110 days to get slot machines up and running at a racing facility, a much shorter amount of time than it would take to develop casinos.

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