On slot machines, a tale of levers and leverage Schmoke, Glendening went from critics to backers in just a year

THE BALTIMORE SUN

A year ago, in the heat of a tough re-election campaign, Baltimore Mayor Kurt L. Schmoke told a group of city ministers just what they wanted to hear.

"Based on my review, I oppose casino gambling for Baltimore City," the mayor said. "I think we can go other ways in stimulating economic development."

Four months later, Gov. Parris N. Glendening had a similar message for another group of ministers and gambling opponents.

"We do not want, and we will not permit, casinos in our state," the governor said.

He left open a slim chance of allowing slot machines at Maryland racetracks -- but said he would do so only as "a last resort" to save a dying industry, not as a means of raising money for government. "We do not need to balance the budget with casino revenues."

That was then.

Today, in an alliance built of political necessity and financial opportunity, Schmoke and Glendening appear to be lining up shoulder to shoulder in the effort to bring slot machine gambling to Maryland -- thanks largely to the torrent of tax revenue the devices would generate.

The mayor said last week that he had a commitment from Glendening to support slots at the state's racetracks, with at least $25 million of the proceeds going to the cash-strapped city for its beleaguered schools.

The governor's version of the agreement is more conditional: Glendening will back slots only if there is evidence Maryland racing is suffering.

The introduction of slot machines would be the biggest expansion of gambling in Maryland since the lottery began in 1973.

The rewards could be immense -- some $245 million in new tax revenue a year,according to one estimate.

But with a large chunk of the population opposed, any embrace of casino-style wagering is fraught with political risk complicated by Maryland's long history of gambling-related corruption.

For Schmoke, the lure of a large new source of money to offset his dwindling tax base has proved too great to resist. For Glendening, a move toward slots would be a high-stakes strategy that might forever identify him as the "gambling governor."

The question is: Does he have a choice?

A legacy of corruption

Legal for-profit casinos disappeared from Maryland on a warm summer night 28 years ago, when the last of thousands of slot machines that dotted four Southern Maryland counties was turned off.

The slots attracted gamblers from up and down the East Coast, but ultimately were doomed by rampant political corruption and stories of lives wrecked by the one-armed bandits.

Two years ago, several out-of-state companies decided it was time to bring casino-style gambling back to Maryland.

The casino interests hired the state's best lobbyists and dispatched them to Annapolis and economically struggling towns such as Cambridge and Cumberland to sell the benefits of "gaming."

The effort sputtered. By last year, the casino operators were taking a different tack; they forged an uneasy alliance with the politically powerful Maryland racing industry, with its 250-year history and an entrenched spot in the state's heritage.

While the racing industry focused on bringing slot machines to the tracks to ward off competition from new slots at Delaware tracks, the casino interests said they would be content with opening slot parlors at off-track betting outlets.

When a slots bill emerged in the General Assembly in March, Schmoke became an enthusiastic backer, focusing less on saving racing and more on saving Baltimore.

"If it can benefit us to the tune of 40 [million] to 50 million dollars a year, then I'm going to support [slots at the racetracks]," Schmoke said.

"Clearly we would have money for promotion of the convention center, we would have money for schools, we would have money for a lot of other things."

But the governor pledged to veto such legislation, saying he needed to see a year's worth of evidence about the impact of Delaware slots before he could decide.

The bill never got out of a House committee.

Schmoke's shift

The state's efforts to force changes in the Baltimore City school system engulfed Glendening and Schmoke as the legislature adjourned in April.

Both the governor and the mayor said they wanted to resolve the lawsuit the city filed last year seeking more state education aid. But finding an answer to what could be the defining issue of Schmoke's third term as mayor proved elusive.

State legislators had demanded that Schmoke give up control of the city school system -- a move overflowing with political risk for him.

Many black supporters, in particular, might look dimly on the mayor if he ceded power to a white governor.

For his part, Schmoke made it clear he needed the city to have a generous payoff from the state to settle the dispute. Despite a looming budget shortfall, Glendening offered $140 million over five years. Schmoke demanded much more.

By last month, the mayor had concluded there was only one way for the state to come up with the money -- slot machines.

The mayor began circulating an article about Philadelphia Mayor Edward Rendell's interest in using the proceeds from riverboat gambling for education.

In a July 15 letter to one city lawmaker, Schmoke outlined his reasoning. Many legislators around the state are sympathetic to the city's plight and they want an overhaul of city school management, he said. But, they oppose any tax increase.

"If the General Assembly and the governor would permit gaming activities in Baltimore, we could negotiate with these businesses a funding distribution formula that would dedicate millions of new dollars to our schools," Schmoke wrote.

Through the last two weeks of July, Schmoke floated his idea of slots for education.

At two baseball games at Camden Yards, the mayor casually discussed it with some senators and delegates he invited to his private box.

And he brought the idea before ministers, community groups and others. At one gathering in Northeast Baltimore, the mayor's slots proposal startled some in the room.

"When he said 'slots,' you could just see the expressions [change] on the faces" of the people there, said Betty Martin, a longtime West Baltimore community leader.

At a July 17 political picnic in Crisfield -- with a reporter standing nearby -- Schmoke playfully talked about a Baltimore casino with Major F. Riddick Jr., Glendening's chief of staff and closest adviser.

Clad in a golf shirt sporting the words "Bally's/Las Vegas," Riddick greeted the mayor. Schmoke then put his finger over the words "Las Vegas" on Riddick's shirt and, smiling, said, "I'm waiting for this to say 'Baltimore.' "

Riddick only chuckled.

Glendening's shift

The governor had also been grappling with the gambling issue.

At a meeting the governor called with city lawmakers in mid-July, Del. Howard P. Rawlings, a Baltimore Democrat, asked Glendening about using new gambling revenue to increase aid for the city's schools.

The governor quickly responded: "That is not on the table."

Several days later, the governor stopped on the first floor of the State House to chat with House of Delegates Speaker Casper R. Taylor Jr., who would like to see slot machines at an off-track betting outlet in his hometown of Cumberland.

Recalling the conversation, Taylor said he brought up the gambling issue: "Do you ever see yourself coming to the point where you're going to support any of these gaming proposals?"

The governor flashed a wide grin, Taylor said, and responded: "I'd hoped that you [legislators] would just continue with that."

"Parris, that's not going to work," Taylor said he replied, suggesting that the governor needed to be at the front of the charge if slots were going to make it through the General Assembly.

Glendening was on vacation last week and unavailable for comment for this article.

On July 26, Schmoke and Glendening spent more than two hours alone in the governor's private office on the second floor of the State House.

State schools Superintendent Nancy S. Grasmick, the governor's top adviser on education issues, sat stiffly on a couch outside the room, a copy of a draft city-state "partnership"

agreement on her lap.

In the hall, a Glendening adviser joked that the two men inside were negotiating over "money we don't have" -- an allusion to the state's expected budget shortfall of some $200 million.

Finally, more than an hour after the meeting was supposed to end, the governor and mayor emerged to announce they had a conceptual agreement" for sharing control of the Baltimore school system. Under the agreement, the state would send the city an extra $182 million in school aid over five years.

A few days later, Schmoke's version of what else happened in the meeting surfaced. The governor, Schmoke said, had given his blessing to legalizing slots at racetracks and had committed to giving the city another $25 million a year for its schools from the proceeds.

But, the mayor said, the governor asked him to keep the agreement a secret -- at least for a few weeks -- until Glendening could produce evidence that Delaware slot machines were hurting Maryland racing.

For their part, the governor's aides said Glendening's position on slots had changed only marginally -- his opposition had "eased," one said.

But, it is clear to many in Annapolis that Glendening would have significant motivation to give quiet assurances on slots to

Schmoke.

The state budget is already tight because of the expected shortfall, making it hard for Glendening to find the $182 million he publicly promised. And slots revenue would make it easier for the governor and legislative leaders to cut income taxes before the 1998 elections, as they would like.

"Glendening needs money, pure and simple," said one lobbyist involved in the issue. "Schmoke floated the gambling idea because he knew the governor would go for it. Glendening had no other source for the money."

Schmoke, of course, had other leverage.

Glendening carried only three jurisdictions in the 1994 election and the mayor's political operation helped fuel his overwhelming victory in Baltimore.

By several accounts, a series of tense meetings in recent months and an exchange of testy letters over the schools issue have strained the relationship between the two men.

To win election to a second four-year term in 1998, the governor likely will need a happy Schmoke at his side in Baltimore. Without slots and the revenue they would funnel to the city, the mayor may not be there.

"The vote [for Glendening] has got to come out of Baltimore City big, and it's got to come out enthusiastically," said Senate President Thomas V. Mike Miller Jr. "Baltimore City's key to him."

Or as another legislator put it: "The mayor has Glendening just where he wants him."

What they are saying

Stephen J. Hammer

Chairman of Project Life

"They've got slots in Delaware and if Maryland dollars are going to Delaware to play them, there's a legitimate argument to put them here. But people should remember, this is not new money we're putting into circulation, it's Maryland money used in a different way and I don't think it's a good trade."

Keiffer Mitchell Jr.

City Councilman

"I'm kind of leery about gambling in the city -- just seeing the empty promises gambling made in Atlantic City. You go three blocks over and you see it -- the crime, what gambling has done to those who can least afford it. I didn't think we'd come to a day where the city and state would have to find revenue for our children's education from the profits of gambling."

J. Joseph Curran Jr.

Maryland Attorney General

"The money just doesn't fall out of the sky. It comes from a person's pocket that can't be spent on daily family needs. ... There may be a windfall for education, but you need more money to take care of losses from gambling ' more money for police, for courts, for people devastated by the loss of their money."

Antonia K. Keane

Sociology Professor

Loyola College

"This strikes me as very bad public policy, tying the education budget to a fragile source of revenue. In general, there has to be a finite limit on the gambling dollar - when will we exhaust people's resources to spend money on this? Allegany County and Baltimore are not affluent places, and that's where we're mining the lower end of the economic scale. I know that [local government] is desperate for revenue, but tying the gambling dollar to education strikes me as extortion. They're taking an idea that isn't too popular at best and tying it to something good like education, and that strikes me as raw, unsophisticated manipulation."

Rebecca Hoffberger

Director and Founder of the American Visionary Art Museum

"It's a shame that gambling is the only way we can think of to achieve such an important priority as schools. But if that is the only way, then so be it."

Murray Saltzman

Retired Rabbi at Baltimore Hebrew Congregation

"It's a serious error. The community must be willing to support education and those crucial needs and services without shortcuts. Shortcuts like gambling always prove treacherous and defeat the ideals they supposedly seek to achieve. And connecting slot machines to education is a particularly dangerous message to send. ... Using gambling as an alternative to the responsible process of appropriate taxes is a mistake."

William Donald Schaefer

Former Governor and Mayor of Baltimore

"You don't like to second-guess the governor and the mayor, but they both have been so inconsistent on this. The governor says no and then he changes his mind and then changes it again. And the mayor comes in late in the session when he knows gambling can't be passed and says he's for it. It seems like a game."

Marvin Mandel

Former Maryland Governor

"As an individual I am not averse to people playing the lottery or the slots if they want to - I'm not a guy who says this is a terrible thing - but I wonder if this is for education or to enrich the racetracks. To tie gambling and education together requires a good hard look. I hate to see education used as a ploy, if it is being used as one."

Sheila Kolman

President of the Public School Administrators and Supervisors Association

"Our association is behind any effort to raise money for the city schools. We are resource-poor. If it happens to come from slots, I guess so be it. We're advocates for whatever it takes to raise money for city schools."

Walter G. Amprey

Baltimore Schools Superintendent

Using an old preacher's line, Amprey said: "Tainted money t'ain't enough. ... I think that anything that we can do that is ethical, that is not illegal, needs to be done to subsidize good programs that we know work for children."

Carla Hayden

VTC Director of the Enoch Pratt Free Library

"We've been looking at long-term funding strategies for [our library] and it caught my attention. We're in the same kind of arena, so we'll be watching carefully to see how it turns. Funding services through public gambling is very debatable. It gets into ethics, and just like censorship, who is to say where the boundaries are? That's why we're very conscious of this. But if people are going to gamble anyway, let's see the proceeds go to a good cause."

Pub Date: 8/04/96

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