State lawmakers from Baltimore are demanding that a larger percentage of racetrack slot machine proceeds be returned to host communities, challenging the governor's gambling proposal.

Their bills add to the burgeoning debate over who should control and benefit from local impact money that would come from slots.

That debate is occurring not only in the legislature but in the neighborhoods nearest to Pimlico Race Course, where some residents fear their community won't get as much aid as those near other racetracks proposed as sites for slot machines.

Identical House and Senate bills sponsored by city lawmakers would require that 5 percent of slots proceeds be returned to neighborhoods within one mile of slots venues.

Gov. Robert L. Ehrlich Jr. has proposed allowing slots at four tracks - Pimlico, Laurel Park, Rosecroft and a track to be built in Allegany County - to increase state revenue and head off a projected budget shortfall of about $1.3 billion in the coming fiscal year. His proposal would return 3 percent of revenue to the racetracks' jurisdictions - meaning City Hall and county governments, not specifically to the communities near the racetracks.

The Baltimore legislators argue that the governor's proposal shortchanges the racetracks' surrounding neighborhoods by not taking into consideration how slots would affect them.

"The problem with all the legislation that we have currently on the table is that they don't recognize the very important value the community has for hosting these venues," said Sen. Lisa A. Gladden, a 41st District Democrat sponsoring the Senate bill. "This bill puts on the table that the community needs a voice, too."

An Ehrlich spokeswoman said the administration is aware of the bills and that the governor's proposal - including the payout to local areas and who controls that money - is still open to negotiation.

Paul Schurick, Ehrlich's communications director, said the governor would be willing to meet with residents of the neighborhood surrounding Pimlico to hear their concerns.

"I don't see why they would be different from any other community. If they have an interest, the governor should meet with them," he said. "It would be a matter of getting it scheduled."

The governor's proposal includes a breakdown of how the proceeds would be divided, with the largest amount going back to the state to fund education. The Baltimore lawmakers' bills do not include a payout plan beyond the local share.

Their concerns are shared by Baltimore Mayor Martin O'Malley, who argues that the governor's proposed share for local communities is paltry.

While Gladden's bill and its House counterpart would cover any slots venue, the legislators are attempting specifically to address the residential neighborhoods around Pimlico. With slots, that track could draw thousands of gamblers daily, increasing traffic and concerns about public safety.

Creating a board

The bills would require that a gambling benefits authority board be appointed to control spending of slot proceeds and allow the funds to be used only in an area within one mile of the track. Racetrack owners would have to seek board approval before starting any renovations to accommodate slots.

The 16-member board would consist of lawmakers, racetrack and slot machine industry officials, residents, area business owners and school officials. The governor would appoint all but two of the positions. The House and Senate leaders would each pick a legislator to serve.

Gladden already is scrambling to amend her bill because, as written, it seemingly precludes spending proceeds in more affluent communities north of Pimlico that are within a one-mile radius of the track.

The bills say the slots money is to be spent in "priority schools" and "priority zones."

To be a "priority school," 75 percent or more of the student body must qualify for free or reduced-price meals; there have been no objections to that provision.

However, a "priority zone" is an area in which the household income is less than 130 percent of the poverty level - roughly $24,000 - or a community designated an urban renewal area.

That would preclude communities such as Mount Washington, which has a median household income of $63,885, and Glen, just northwest of the track, with a $39,173 median, from receiving funds.

"I am fearful that these bills discriminate against the people who live north of Northern Parkway," said Larry Kloze, a Mount Washington resident.

"Our neighborhood is not opposed to helping people not as well off, but this bill obviously is just an attempt to help people who are less well off," Kloze said.

Gladden acknowledged that her bill is intended to offer more help to lower-income areas, such as the depressed Park Heights community south of the racetrack. But she said she didn't intend to exclude others.

She said she plans to change the bill to allow all areas within a mile of Pimlico to receive money to address concerns about traffic, security and trash. But areas fitting the definition of "priority zone" would be allowed more money to use for redevelopment.

"It doesn't exclude," Gladden said, "it just helps to put money where money is needed. I think the [more affluent] community will understand that that side of the racetrack needs money."

For more than three decades, a percentage of Pimlico's live and simulcast racing proceeds have been given to the community - usually $500,000 to $800,000 annually. But Gladden said not enough of that money has been effectively used to help Park Heights reverse blight.

Payoff for communities

Del. Samuel I. Rosenberg, a sponsor of the companion House bill, said that if the communities around Pimlico are forced to live with slot machines, the payoff should be money for neighborhood improvement.

"This is an important opportunity to provide money for redevelopment and preservation," he said. "Bringing thousands of people into that neighborhood every day is going to have an effect on the ecosystem in those communities, if you will."

Gladden and Rosenberg said they would vote for slots only if it is legislated that local proceeds are sent directly to the Pimlico area for residents to do with the money what they wish.

Sun staff writer Michael Dresser contributed to this article.