Keno bill hangs on for another hearing as legislators search for revenue options

One legislative committee has rejected Keno gambling in the state, but another–the one that would have to come up with a revenue alternative if the proposal dies–isn’t ready to let go.

“We will make our own decision on Keno,” said Rep. Cameron C. Staples, D-New Haven and co-chairman of the Finance, Revenue and Bonding Committee. The committee will hold a public hearing Monday on Keno and other ways to borrow $1.3 billion to balance next year’s budget.

“I am doubtful there is any interest to increase taxes or make budget cuts to come up with this $1.3 billion,” Staples said. “There is pressure to do this.”

The budget for the fiscal year beginning July 1 relies on borrowing $1.3 billion against future revenue, but the sources of that revenue are yet to be determined. One possibility is Keno: Gov. M. Jodi Rell’s budget office says allowing the game in 1,000 bars and restaurants across the state would enable to state to borrow $400 million next year against the anticipated annual revenue of $60 million the game would generate.

However, there’s a major revenue risk involved. Officials of Connecticut’s two Indian casinos say if the state gets into the Keno business it would violate a revenue-sharing compact under which the state gets a cut of casino slot machine money. That agreement is expected to bring the state $371 million this year.

“The moment that exists – that is, a game as the state describes Keno starts – the obligation to make the payments stops,” Jackson King, counsel for Foxwoods, said following a Public Safety and Security Committee hearing earlier this month.

The potential loss of the slot revenue was a big reason the committee let its deadline pass last week without acting on the Keno bill. Sen. Andrea L. Stillman, co-chairman of the committee, said the proposal did not have enough support to win committee approval and won’t become law even if Staples’ committee endorses it.

“The votes are not there. I don’t think anyone wants to put that much money at risk,” the Waterford Democrat said.

But Robert L. Genuario, Rell’s budget director, said legislators may not have much choice.

“If you don’t like Keno, then what?” Genuario said. “I guess the question is, do they have a back up plan?”

Senate Majority Leader Martin M. Looney said it is too early to say what his party plans to do to fill the $1.3 billion gap, but Keno is gaining some momentum.

“It’s something we are considering, but whether we embrace Keno remains to be seen,” the New Haven Democrat said.

But Senate Minority Leader John P. McKinney said legislators should work to cut state spending by the $1.3 billion needed to fill the gap.

“I don’t support borrowing to cover our operating expenses,” he said.