Wise warns 'no Promise, no budget': ; Governor's stand could lead to political standoff

DAILY MAIL CAPITOL REPORTER

Telling lawmakers "no Promise, no budget," Gov. Bob Wise isthreatening to veto any state budget that doesn't include a fundedPromise scholarship program that pays full college tuition for thestate's good students. The warning of an impending politicalstandoff came Tuesday, the same day House members made drasticchanges to the governor's gray machine gambling plan and one dayafter a House committee gutted the governor's Promise scholarshipprogram.

The House Finance Committee voted 16-9 for a bill to regulate andtax video gambling in West Virginia with a limit of 9,000 machinesrestricted to adult-only bars and private clubs.

But the committee bill contained huge concessions to gamblingoperators by, among other things, slashing the state's tax rate froma flat 48 percent to a sliding scale ranging from 30 to 42 percent.The state's take from the gambling tax is expected to fall from $125million to $70 million.

And that tax money is no longer restricted to use for Promisescholarships, as it was in the governor's version. Lawmakers added aprovision giving them discretion.

Wise's Promise scholarship is also in trouble. The HouseEducation Committee passed a bill Monday transforming the Promiseprogram from a free ride to college for the state's B-averagestudents - valued at $2,700 a year - into a $500 a semester grantfor C-average students in two-year, four-year or vocational schools.

Wise is clearly not entertained by House lawmakers making drasticchanges to his two most coveted pieces of legislation. Wise feelsthe changes violate pledges he made on the campaign trail late lastyear.

"That doesn't match what he ran on," explained governor'sspokesman Bill Case. "If there's no Promise, there's no budget."

But House Speaker Bob Kiss tried to discourage interpretations ofthe House's recent actions as a rejection of Wise's politicalplatform. Kiss said the governor should expect lawmakers to makehash of his proposals. He even quoted that old political axiom, "thegovernor proposes and the legislature disposes."

"We're not a rubber stamp," Kiss said.

Kiss said it was still too early to label the House actions asrejections. The fate of the House Education Committee bill to gutPromise is not clear yet. Kiss seemed not ready to ram heads withthe governor just yet.

But governor's officials were clearly worried Tuesday that theHouse Finance Committee redirected the flow of gambling tax moneyfrom a special Promise program account into general revenue.

Kiss explained that House lawmakers do want to fund Promisescholarships - in some version - but want to decide how much to pumpin there.

"Appropriations are our business," Kiss said. "We want to retaincontrol over what this program costs."

But now no one knows how much tax revenue would be generatedunder the new gray machine bill.

Finance committee members were forced to take the unusual step ofworking from an outdated fiscal note that explained the financialimpact of only the governor's version of the bill.

Wise's bill was calculated to bring in $125 million annuallyafter three years of regulation. The new version is expected tobring in between $70 million to $90 million.

State Lottery Commission officials need to craft a new fiscalnote by Friday, in time for a final House vote on the gray machinebill.

And the new bill may force the lottery commission to oversee thisnew gambling industry at a loss. The new bill slashes thecommission's cut from 4 percent to 2 percent. No one asked statelottery officials if they could still effectively police theindustry with a smaller tax cut, said Lottery Director JohnMusgrave.

But with the lottery needing to hire 47 new workers forenforcement of this bill, Musgrave said the tax cut "will put us ata substantial loss" at least during the first years of operation.

How much cities could reap in tax revenue from the gambling billwas also tempered by the new bill. Cities would get 2 percent of thegambling cash off the top, but would be prevented from assessing a 2percent amusement tax or business and operation taxes. In the trade-off, the cities get less.

The bill does specify that state employees, teachers, StatePolice troopers and corrections officers would get pay raises.

But missing from Tuesday's discussion of the bill was any of thedramatic, near-theological debates on the goodness of gambling thatsurfaced just prior to a House Judiciary Committee vote to approveit.

Delegate John Doyle, D-Jefferson, offered a pragmatic explanationTuesday for voting for the bill.

He noted there are three options open to lawmakers: continue todo nothing, ban the machines or regulate.

A ban is not politically feasible, said Doyle, the vice chairmanof the finance committee. Continuing to let gambling exist in aquasi-legal, "gray" state is not permissible.

Regulation, he said, "is the only realistic way to control thiscancer that is out there."

Writer Todd C. Frankel can be reached at 348-4886 or by e-mail attcfrankel@dailymail.com.