A new law enacted by Gov. Phil Murphy increases the likelihood long-standing state subsidies for New Jersey’s horse racing industry will remain in place for several more years. But the law doesn’t guarantee that financial aid.

Advocates say using public funds to subsidize horse-racing prize money helps preserve thousands of jobs and protects millions of dollars in tax revenue generated annually by the horse racing industry, including at tracks in Bergen and Monmouth counties.

Earlier this summer, lawmakers agreed as they put $20 million for such subsidies in the state’s latest annual budget. That continued a practice that began in 2019 during Murphy’s first term in office.

At the same time, lawmakers also sent to the governor bipartisan legislation seeking to extend annual subsidies totaling $20 million through the 2029 fiscal year.

Horse racing industry ‘critical’ to NJ

In a signing statement issued Thursday along with his endorsement of the subsidy legislation, Murphy cited the “critical importance” of New Jersey’s horse racing industry, as both an economic driver and a means to support open space and farmland preservation goals.

“The funding promised by this [law] will allow New Jersey to continue to offer one of the most exciting horse racing experiences in the nation, while also providing a boost to an industry that is integral to our economy,” Murphy said.

Farming advocates have suggested horse racing subsidies support the state’s broader equine industry, including not only racetracks, but horse boarding services, hay and straw growers, and other ancillary businesses.

However, Murphy’s signing statement also reminded lawmakers that language in the state Constitution makes clear that the governor and lawmakers can only budget both revenues and expenditures on an annual basis. Murphy, who is barred from seeking a third consecutive term, will end his second term in January 2026.

That means the funding earmarked by the new law for the subsidies will still be subject to appropriation by the governor and lawmakers each year through the 2029 fiscal year.

And since the state Constitution generally prohibits state government from operating with a deficit, governors and lawmakers can cut future funding promised in law for a specific purpose to ensure annual spending remains balanced in any given year.

Murphy underlines important caveat

“Consequently, the appropriations that this bill purports to require through State fiscal year 2029 are not binding and serve only as a strong expression of intent to provide funding in future fiscal years,” Murphy said in the statement.

While some have questioned why taxpayer dollars should be subsidizing private businesses, the sponsors and other supporters of the subsidies have pointed to a recent study that indicated the industry supports more than 3,700 jobs in the state.

These include direct and indirect jobs, as well as jobs “induced” by the spending of those with direct and indirect jobs supported by the industry.

And for the state itself, the industry generates about $75 million in tax revenue annually, according to the study.

Meanwhile, farming advocates have suggested horse racing subsidies support the state’s broader equine industry, including not only racetracks, but horse boarding services, hay and straw growers, and other ancillary businesses.

Where the money goes

In recent years, the subsidies — which have averaged $20 million annually — have been distributed in equal amounts to the state’s thoroughbred and standardbred industries.

All the funds allocated to the thoroughbred industry have gone to subsidize overnight purses paid at Monmouth Park, according to a fiscal analysis prepared by the nonpartisan Office of Legislative Services.

For the standardbred industry’s portion, 60% has gone to Meadowlands Racing overnight purses; 16% to Freehold Raceway overnight purses; and 12% to the New Jersey Sire Stakes purses. Another 6% has funded purse bonuses for horses sired in New Jersey and the final 6% has funded breeders’ awards purses, according to the analysis.

Meanwhile, as a condition of receiving the purse subsidies, the recipients must report annually to the Legislature, the governor and the New Jersey Racing Commission on the uses of funds appropriated in the preceding fiscal year, the analysis said.

The new law requires the same distribution method called for in prior law, according to the OLS analysis. It also carries on the requirement that fund recipients must report annually on how the taxpayer funds have been used.