Standard & Poor's sends W.Va. a message
IN the early 1990s, state officials allowed its four racetracks to add slot machines - and the money poured in from Ohio, Pennsylvania, Kentucky and Maryland.
Inevitably neighboring states caught on and they opened their own casinos. West Virginia's cash cow won't be supplying as much milk.
This is making some people nervous. Standard & Poor's just put the state on notice of a possible downgrading in two years of the rating of the lottery-backed bonds issued by the Economic Development and School Building authorities.
That's fair warning and there is plenty of time for lawmakers and Gov. Earl Ray Tomblin to adjust spending and protect the state's creditworthiness, which keeps its borrowing costs down.
A look at lottery finances shows the size of this task.
According to its annual report, in the fiscal year 2012, the lottery distributed:
But the lottery feeds many other mouths too.
For example, after putting $271.6 million into general lottery funds, the racetrack slot machines also gave more than $50 million to special accounts such as the capital reinvestment fund, the workers' compensation debt fund, tourism promotion and so forth, all the way down to the parking garage fund.
Officials were only too happy to make so many agencies and people dependent upon lottery revenues. But as S&P pointed out, the money is dwindling. To keep the state's solvency beyond a doubt for bond buyers, lawmakers and the governor need to prioritize spending and prepare for the cutbacks that are inevitable.
West Virginians were smart enough to latch on to the revival of the gambling industry before nearby states.
The state has had a good ride. Now the state must wean some agencies from lottery money.