Happy New Year!

What will 2008 bring for Maryland’s equestrian community?

In 2007, we saw soaring fuel prices and soaring corn prices - thus soaring feed prices. The “corn rush” convinced many farmers to plow under their hay fields; this reduced hay production, coupled with fewer cuttings due to one of the worst droughts on record (which, interestingly, did not garner much media attention) sent Maryland equestrians into winter with limited hay supplies and has dealers scouring the countryside for affordable, quality hay. Maryland State lab fees for necropsy and disposal have sky rocketed.

The 2007 special legislative session, held in November, was yet another disappointment for the racing industry. Two bills were pushed through the legislature by the Governor and legislative leaders. One bill is an amendment to the Maryland Constitution to allow up to 15,000 slot machines in Maryland. This is the referendum bill that will require voter approval in next November’s election. The other bill contains the “nuts and bolts” and would go into effect only upon passage of the referendum bill.

The handling of these bills has left a bad taste in the mouths of many die hard slots supporters. Yes, we want slots, but we also want leadership that will lead and not push off this controversial issue onto the voters.

So in 2008, the racing and gaming industries will be gearing up for a huge public relations battle as they try to scrap and fi ght for each “ Joe Voter” on the street. We can expect plenty of alarmist rhetoric, plenty of Henny Pennies, plenty of moral hand wringing, high roads and low roads. How many will ask the simple question: if the State of Maryland already allows gambling in the form of lottery and pari-mutuel, why are slots really any different? Gambling is gambling. If the gaming industry is able to pull off a victory, and the general public votes for slots, there is no guarantee that the slots will be located at the race tracks.

Will slots save Maryland’s racing industry? Or is it too late?

In 2007, we saw major Thoroughbred breeding farms purchase land in neighboring states (that have slots) and announce plans to move their big stallions. The bredfunds in surrounding states are looking better and better, and mare owners are opting to drop their foals elsewhere. The December Fasig- Tipton sales in Timonium saw numerous Thoroughbreds go home due to “no bids.” A Carnivalay mare with over $170,000 in earnings herself, and whose get which have started are already earning in the $100,000s, and who is in foal to leading sire Two Punch, whose get have earned over $41 million, sold for only $18,500. Clearly, there were deals to be had at the December Timonium sales!

Magna Entertainment Corporation, the owners of the Maryland Jockey Club, has reduced the number of live racing days at Laurel and Pimlico from 220 to 140 a year, and there are rumors that those days could be reduced even further. Maryland became the mecca of U.S. racing because it was the first state to offer enough racing days that trainers could base their operations in Maryland, rather than lead gypsy lives following the seasons up and down the east coast. Trainers were able to settle down, buy homes and farms, which in turn fueled the business for vets, farriers, tack and feed stores. All of this has flat track trainers worried.

Penn National Gaming, a casino operation, backed out of their deal to purchase Rosecroft Raceway after the legislature cut them out as a potential slots location (despite the fact that they swore that the acquisition of Rosecroft was not contingent on slots - yeah, and I have a bridge to sell you). Rosecroft, like the Thoroughbred tracks, has also scaled back its number of live racing days.

So, is the horse industry doomed in Maryland?

Well, while the racing industries may be struggling, 2007 showed continual growth in the sport horse segments. Real estate has gone through a much needed market correction, and while sales may not be as insane as they were in recent years, values are holding steady and the good real estate agents are still closing deals. Instead of flipping their properties, farm owners are instead opting for improvements, and good barn builders found no shortage of jobs in 2007, and lending companies were still cranking out the loans for stables and indoors.

2007 saw ribbon cuttings for numerous new boarding, lesson and training barns in the sport & pleasure segments of Maryland, with no shortage of boarders. Maryland continues to attract more and more international level competitors and trainers, attracted to Maryland because of our accessibility to all the major east coast and mid west venues, and because of the ability to grow their businesses in our vibrant community of riders. There are so many new stables that it has stretched the resources of the Maryland State Stable Inspection Program to the point in which they had to change the stable license from one year to two years in order to have enough time to inspect all the facilities for re-licensing (alas, no money in the budget to just hire more inspectors).

Enrollment in Maryland’s various university and college equine studies programs continues to grow, and the schools are continuing to expand these programs in order to meet the demand. The Maryland Department of Agriculture is receiving tens of thousands of dollars in federal grants that will be funneled through to the owners of horse farms for pasture improvements, and Maryland’s Agricultural Land Preservation Foundation is exploring how they can more fully embrace horse farms in their programs. Plans are being laid for another Maryland Horse Industry Forum in 2009, and the Maryland Horse Park and an international import/export facility are still hot topics.

Horse World Expo vendor spaces sold out, and here at The Equiery,
advertising increased in 2007, despite the fact that - across the board
- print media ad revenues have nosedived. What does this mean? Th is
means that Maryland’s equestrian industry continues to grow - despite
everything!

So, all in all, 2008 looks to be very promising for the Maryland equestrian community! Happy New Year!

Arabbers Pony Rumor Squelched

In December, our good hearted equestrian community revved into high gear on a rumor that all the Arabbers ponies (Baltimore’s ponies that pull vendor carts through the city) were headed off to slaughter unless they found homes for them.
Readers may recall that a warehouse being used as stabling was condemned, although the ponies themselves were in acceptable condition. Horsemen came to the rescue and temporary quarters were found for them at Pimlico Race Track. However, that contract came to an end.

Brooke Vrany, Director of Programs and Emergency Services for Days End Farm Horse Rescue, reports: The Baltimore City Health Department is the lead agency responsible for the Arabbers ponies), and their representative Olivia Farrow has confirmed that no horses were being sent to the slaughter auctions. Days End Farm Horse Rescue and the Maryland Jockey Club transported 28 horses on Thursday, December 13 to temporary stabling provided by the City beneath the Monroe Street Bridge in South West Baltimore. These are the actual cart ponies that will remain in the city with their owners. The remainder of the 49 horses, which were not the cart or Arabbers ponies, are currently being sold to interested buyers by their private owners or placed in good homes. Unsold or abandoned horses were scheduled to go to various rescues. The “Emergency Situation” is to find the remaining horses good homes since currently most rescues, as is ours, are full to capacity.

Days End has been working with the Health Department, Animal Control and City Housing Authorities to help insure that proper treatment and Maryland’s legal minimum standards of care are met. It has been an arduous task finding a new location for the Retreat Street Stables, but several options are in negotiation.

Horse Farms Are Agriculture

If you believe that horses are an integral part of agriculture, and you receive a Census form, please fill it out. It is hard for the horse industry to be taken seriously as part of agriculture if we do not fully participate.

Conducted by the U.S. Department of Agriculture (USDA) every five years, the Census is a complete count of the nation’s farms and the people who operate them. The Census looks at land use and ownership, operator characteristics, production practices, income and expenditures and other topics. It provides the only source of uniform, comprehensive agricultural data for every county in the nation.

“We’re committed to making this Census the best count ever. It’s about the future of agriculture and rural communities in our state,” said Agriculture Secretary Roger Richardson. “The Census of Agriculture provides information that is not available anywhere else - information that benefits agricultural producers and their communities. Policy-makers factor Census data into decisions concerning agricultural and rural programs. Community planners use Census to target needed services to rural residents. Companies rely on Census data when determining where to locate their operations. And farmers can use Census data to help make critical decisions about their businesses.”

Census report forms were scheduled to be mailed out by the USDA National Agricultural Statistics Service (NASS) on December 28, 2007, to collect data for the 2007 calendar year. Completed forms are due by February 4, 2008. Farm owners can return their forms by mail or, for the first time, they have the convenient option of filling out the Census online via a secure web site.
For more information about the 2007 Census of Agriculture, please visit http://www.agcensus.usda.gov/

Update: 2007 Special Session
by Nancy Hill

The special session of the Maryland General Assembly has come and gone -- but has it left the citizens of Maryland better or worse off? That is a question that only time will tell the answer. That time could come as quickly as January 1, which is the date the tax increases become eff ective. Rest assured that no matter what spin our political leaders put on it, there’s no way to make up a $1.7 billion deficit by allowing people to pay the same amount of taxes much less by giving anyone a tax break.

On October 15, Governor Martin O’Malley issued an executive order convening the General Assembly into a special session to begin on October 29, 2007 “for the purpose of passing legislation to address Maryland’s structural deficit.” During this special session, 34 bills were introduced in the Senate and 60 in the House. Following are the only six bills (all of which were passed by the General Assembly and have been signed by the Governor) that were introduced for the Governor by the President of Senate and the Speaker of the House of Delegates:

House Bill 1, Budget Reconciliation Act. HB 1 directs the Governor to identify $550 million in state spending/budget reduction. It identifi es 500 vacant job positions to be eliminated, freezes per pupil inflation for fiscal years 2009 and 2010, and it identifies Program Open Space (POS) money that will go toward operating state parks and forests while reducing the local share of POS funds.

SB 2, Tax Reform Act overhauls the state’s tax structure beginning January 1, 2008, by establishing new individual income tax brackets and rates and altering regular personal income tax exemptions.

It also extends the sales tax to computer services, such as computer facilities management and operation, custom computer programming, computer system planning and design that integrate computer hardware and software, computer disaster recovery and data processing, storage, and recovery, hardware or software installation, maintenance and repair. This provision will be effective from fiscal year 2009 until the end of fiscal year 2013 unless the General Assembly extends the time. It does not include any computer services used in education. It is expected that the computer services industry will lobby to change this part of the new law during the regular 2008 General Assembly session.

Other proposals that would have extended the sales tax to health clubs, tanning salons, massages, property management, or landscaping services were eliminated.
Another big provision of this act will increase the corporate income tax rate from 7% to 8.25%, also beginning January 1, 2008. Many people don’t have any sympathy for corporations but it’s important to remember that corporations are in business to make a profit. They will pass this increase on to their customers/clients so, again, we will all be paying more – however indirectly. Keep in mind that many small businesses are corporations and these businesses are struggling to make a go of it.

Now to slots.
SB 3, Maryland Education Trust Fund – Video Lottery Terminals. After five years, a slots bill of sorts passed the General Assembly and was signed by the Governor. This bill establishes the regulatory and operational framework for slots, however, it is contingent upon ratification by Maryland voters of a constitutional amendment that would permit VLTs (see HB 4 below).

The State Lottery Commission will be expanded to provide oversight and will own/lease VLTs as well as the central monitoring and control system. Up to fi ve licenses can be awarded to locations with no more than one location in a county and ownership of more than one license will be prohibited.

The bill also covers how the revenue will be distributed, as follows: • The Education Trust Fund will receive between 48.5 to 51% • 33% will go to lottery operation licensees • 7% (not to exceed $100 million annually) will be dedicated to purse and bred funds to help the horse racing industry • 5.5% to local jurisdictions that host a slots facility • 2.5% to racetrack renewal (not to exceed $40 million annually) for a period of eight years • 2% to the State Lottery for administrative and other costs • 1.5% to the small, minority, and women-owned business investment account. Also provided for in this bill is a $100,000 annual grant to Fair Hill which will be taken out of the amount provided to Thoroughbred purses.

HB 4, Video Lottery Terminals – Authorization and Limitations.
This is the bill that will be on next November’s ballot for the voters of Maryland to decide whether SB 3 (above) will become law and slots will be permitted. You will be voting to allow the following: • Up to 15,000 VLTs will be permitted in the following locations: - Anne Arundel County within two miles of MD Route 295; - Baltimore City within one-half mile of I-95, within one-half mile of MD Route 295, and on property owned by the City of Baltimore; - Worcester County within one mile of the intersection of Route 50 and Route 589; - Cecil County within two miles of I-95; and - State property located within Rocky Gap State Park in Allegany County. • Slots locations must comply with all local planning and zoning laws. • Additional forms or expansion of gaming may be authorized by an act of the General Assembly through a referendum that will have to be approved by voters in a general election.

As you can see by the locations listed above, no specific facility is named although it can be assumed – but not assured - that Laurel Racetrack will be the Anne Arundel County location and that Ocean Downs will be the Worcester County location. However, there will be competitive bidding for all five locations.

If you are supportive of Maryland’s horse industry, you cannot take for granted that this ballot question will pass. You must get the word out to everyone you know to vote for this constitutional amendment.

HB 5, Transportation and State Investment Act provides additional funding for transportation and other state programs. This can only happen one way – by increasing yet more taxes, as follows: • The vehicle excise tax rate will increase from 5% to 6% of the vehicle’s purchase price or fair market value beginning January 1, 2008. • A one-time certificate of title fee will increase from $23 to $50; • The state’s sales tax will increase from 5% to 6% beginning January 1, 2008; • A Chesapeake Bay 2010 Trust Fund will be established, beginning July 1, 2008, using a portion of the existing revenues from the motor vehicle fuel tax and from sales tax on short-term vehicle rentals; • Increasing the state tobacco tax from $1 to $2 per pack beginning January 1, 2008.

SB 6, Working Families and Small Business Health Coverage Act. This law became effective on November 19, 2007 and expands eligibility for Medicaid funding and establishes a Small Employer Health Benefit Plan Premium Subsidy Program.

Other than the slots bills, which will not become law unless the voters approve, all of what I have reported upon will ultimately cost the citizens of Maryland more money. Take for instance, the sales tax increase. While a one penny increase in sales tax seems insignificant, keep in mind that it is in reality a 20% increase. If you are buying an item that costs $5, you may not notice the increase. However, when you buy a new appliance, electronics, or an automobile you will certainly notice.

A friend, who owns Thoroughbred race horses, pointed out to me recently how much more sales tax she will pay when she buys a horse at the sales. On a $20,000 horse, the tax will increase the tax from $1,000 to $1,200.
It wasn’t widely reported by the news media, but between the General Assembly and the Governor, they increased taxes well beyond what is needed to cover the current deficit. This can only mean an increase in the amount our state government will spend.

I have been amazed at the lack of public outcry at these tax increases. For the most part, I think we can blame our political leaders who used the slot machine issue to divert attention away from the real purpose of the special session, which was to raise taxes. When you add the increase in income taxes, sales taxes, excise taxes, etc., to our already exorbitant electric bills and the high price of fuel, Marylanders will have considerably less money to spend on things that make their lives easier.

I look forward to reporting to you during the 2008 regular General Assembly session on issues relating to Maryland’s horse industry.

©2008 The Equiery