PLACING A BET ON NEW CASINO TAX PLAN
The same casino responsible for the recent court ruling that could end payments to municipalities under Pennsylvania’s gambling law now is pitching its own plan to restore them.
Under the proposal advanced by Mount Airy Casino, all 12 gambling venues in the state would pay 4 percent of their gross terminal slot machine revenue as their “local share” to compensate the municipalities that host them.
Michael Sklar, an attorney for the casino in Monroe County, estimated this week that the proposed tax would generate a little more than $94 million a year. That’s just slightly less than the $95 million annually that the municipal portion of the local share tax was producing before it was struck down as unconstitutional by the state Supreme Court last month.
It’s unclear how the Mount Airy proposal will play in the Legislature, which has not reached a consensus on how to fix the law, or among the other casinos in the state. Rivers Casino in Pittsburgh and The Meadows Racetrack and Casino in Washington County declined comment on the proposal. As for the other casinos statewide, Mr. Sklar said, “We have communicated our position to them. As of now, no one has said we’re behind you.”
On Tuesday evening, the Senate gave preliminary approval to a plan intended to provide a temporary solution. Under the proposal, Category 1
and Category 2 casinos would pay a $10 million annual fee, and the municipal distribution would remain the same, while there would be some changes to the county distributions, said Jennifer Kocher, spokeswoman for Senate Republicans.
The Senate amended the proposal into an existing bill, which could get a final vote Wednesday. House Republican spokesman Steve Miskin said they had not seen the proposal and would review whatever the Senate sends to the House.
Asked Monday about the situation of municipalities that have come to rely on the revenue, Senate Majority Leader Jake Corman said: “They should be angry at the casinos for suing ... that’s what started this. The casinos committed to this and then a couple of them filed a lawsuit.”
Under the Mount Airy proposal, it would be up to the Legislature to determine how the money is spent — whether each host city, borough or township gets the same amount of revenue as under the old system.
“Mount Airy recognizes the benefits of the local share tax and its importance to the local communities. The uncertainty and confusion they’re facing right now is incredibly problematic,” Mr. Sklar said.
The casino would oppose an attempt to fix the current law by requiring each casino to pay a flat fee to the host municipality. Mr. Sklar said casino representatives have heard that the General Assembly is considering a flat fee of anywhere from $12.5 million to $15 million.
Such a fee, he maintained, would be just as unconstitutional as the portion of the gambling law the Supreme Court overturned.
“If that’s the road they go down, there’s going to be more litigation,” he vowed.
In striking down the municipal portion of the local share tax that most casinos pay to host cities and towns based on their slot machine revenues, the court ruled that the system violated uniformity provisions and was therefore unconstitutional.
Under the 2004 gambling law, all casinos except those in Philadelphia and the resort venues in Nemacolin and Valley Forge paid 2 percent of their gross terminal revenue or $10 million a year to the host municipality.
Specifically, the rule required a 2 percent payment if revenues topped $500 million a year or $10 million if they did not.
Since the law was enacted, every casino has paid the $10 million. The court ruled the formula imposed different tax rates on casinos depending on their size. It gave the state Legislature 120 days to fix the law.
Under the proposed 4 percent tax, each casino would pay a varying amount depending on earnings.
Last year, for example, Rivers Casino would have paid $11 million — or $1 million more than it now pays the city of Pittsburgh — while The Meadows Racetrack in Washington County would have paid $8.8 million, or $1.2 million less than it now pays as its municipal share, based on the state gaming control board figures.
Mount Airy would have paid $5.6 million, or $4.4 million less than that it has been paying.
Together, casinos would have paid $94.6 million, according to the gaming board.
The September court ruling also impacted the portion of the law that earmarks 2 percent of gross terminal revenues to host counties, a decision that affects Allegheny and Washington counties.
State Senate Minority Leader Jay Costa, D-Forest Hills, said he’s in favor of maintaining the status quo — meaning that each host municipality would continue to get the same amount of money it has been receiving.
While the Legislature works to fix the law, Pittsburgh is trying to negotiate a payment in lieu of taxes with Rivers Casino so that it continues to receive $10 million a year from the North Shore venue..