Racing: The very word spoken at the State House here conjures up images of a painful past -- a tumultuous history of political corruption and a scandal that sent one former governor to jail.

Just as strong as the political taint are the moral overtones permeating any racing debate. "Racing," one raspy-voiced Maryland senator declared last week, "is an evil."

On the other side, there are the economic facts, cold and hard.

Racing generates $600 million in revenue annually and is the third largest private industry in the state, behind only Bethlehem Steel and Westinghouse. Racing employs an estimated 12,000 people, including breeders, jockeys, trainers, veterinarians and concessionaires.

Yet its backers say racing in Maryland is nearing financial ruin. Even while attendance at some tracks has increased, losses have mounted as operating expenses soar.

The Free State harness raceway at Laurel lost more than a quarter of a million dollars last year, according to president Frank DeFrancis. Laurel Race Course lost more than $795,900, on top of $535,000 the year before. Bowie lost more than $147,800, and Pimlico would have lost more than the $607,000 it did had it not been bailed out by selling television rights to the Preakness. Sam Siciliano, public relations director for Pimlico, said the track's expenses this year topped $520,000 for payroll and maintenance even before racing began.

Faced with these statistics, this year's General Assembly once again is treading reluctantly into the complex and politically dangerous world of racing, considering a limited package of bills designed to ease the financial burden of the faltering racetracks. Most of the proposals, introduced by racing's perennial defenders in the legislature, deal with increasing the tracks' share of the betting and allowing some Sunday racing.

The dilemma for legislators is how to rescue this financially ailing industry, which most concede is vital to the state's economy, in an election year.

Shortly after the bail-out package was introduced recently, crackly voiced Sen. Frederick C. Malkus, Jr. (D-Dorchester), the Senate's 70-year-old anachronism, clutched his microphone close to his lips and proclaimed, "I don't intend to vote for this. Last time I voted for it, I went before a grand jury."

Said Sen. Victor L. Crawford (D-Montgomery), summing up the sentiment of many legislators here, "I'm always leery of racing bills. We lost a governor because of it. We lost a few others because of it. All racing bills are suspect. Some are more suspect than others."

This year's rescue effort is modest -- "a Band-Aid," according to Sen. Thomas Patrick O'Reilly (D-Prince George's) -- compared to the sweeping reorganization that Gov. Harry Hughes proposed last year.

The chief Senate supporter, Melvin Steinberg (D-Baltimore County), has opted for a gradual, step-by-step solution instead of the comprehensive consolidation and state take-over approach pushed unsuccessfully last year by the governor.

Also, where last year's bill became a Christmas tree of special interest amendments, Steinberg has introduced each racing measure as a separate bill, to avoid the kind of scattershot attacks on individual provisions that helped kill last year's racing package.

"Racing has had a very traumatic background," Steinberg said. "Many legislators are apprehensive and defensive about voting on racing legislation."

Last Friday, six of the separate, noncontroversial racing bills slipped quietly through final passage in the skeptical Senate and now go to a similarly leery House of Delegates.

One bill would allow Sunday harness racing at Free State and another would allow Sunday racing twice-a-year at the Timonium Fairgrounds, on the two fall Sundays during the state fair. In return for the Sunday dates, the tracks would have to close another day. Owners expect to reap bigger crowds and higher profits in the trade-off. Howard Mosner, general manager of Timonium, predicted that his track would gross $1 million on a Sunday, compared with about $450,000 on a weekday.

The centerpiece of all the racing bills -- and likewise the most controversial -- is a provision to give two additional cents out of every dollar bet to the owners of the four thoroughbred tracks. When the bill came up for a final vote before the Senate late tonight it was greeted with catcalls. But after only one senator objected, it passed by a 32-to-11 vote. The measure now goes to the House.

In Maryland, of every dollar bet on win, place and show, 85 cents is returned to the bettors. That leaves the state and the owners a so-called "takeout" of 15 percent. The proposed bill would increase that takeout to 17 percent, putting Maryland in line with Pennsylvania, New Jersey and New York. (Timonium, a track of less than a mile, has a 16 percent takeout, so its added takeout would be only one percent.)

Barely was that two-percent proposal on the Senate floor when it was bombarded: First by warring industry factions -- horsemen versus trainers versus owners -- that traditionally have balkanized the racing industry here, and then by Senate protectors of "the common man," who derided it as a rip-off

"You're taking it away from the little guy," said Sen. Julian L. Lapides (D-Baltimore). "He's getting two cents less for his dollar."

"Is this money going into profit for the owners?" demanded an indignant Sen. Tommie Broadwater, Jr. (D-Prince George's), saying that there is no assurance that the added money would be used for improving track operations.

Meanwhile, even the owners are complaining that the added takeout is only a stop-gap measure. What is really needed, they say, are the kinds of generous tax breaks other states have adopted, as well as a drastic reduction of the state's hefty slice of all racing revenues.

"This is just a Band-Aid, when you think about it," said Pimlico's Siciliano. Timonium's Mosner said the extra takeout money will cover only increased labor costs. Declared Free State's DeFrancis, "more drastic measures have to be taken."

With this year's modest financial relief plan eliciting the ghost of former scandals, along with the election year jitters and with Gov. Hughes taking a hands-off attitude, the owners are resigned to wait for a more receptive climate.

"One day -- and it's not this year, being a political year -- there must be legislation for the state to focus on a reduction of its share," DeFrancis said. "The racing industry needs economic relief from the state . . . The state's share comes off the top. They don't give a damn whether I make a profit or not."