State officials gambling on casino tax fix
With a May 26 deadline to change a host-community provision in the state law governing casinos fast approaching, some state legislators from the county say they are working hard on a fix.
“We’re actually meeting this week to try to figure out what type of legislation we can put forth to try to resolve this thing once and for all,” said state Rep. Jamie Santora, R-163 of Upper Darby, a member of the House Gaming Oversight Committee.
Santora said the “we” is fellow Gaming Committee member Scott Petri, R-178, of Bucks County, whose district is also impacted by the host provision rule.
“We know what we need to do from a constitutional standpoint, but we’ve also got to get 102 votes for it and that’s what we’re doing right now,” said Santora.
The issue stems from a Sept. 28 state Supreme Court ruling that struck down the local share assessment in the Gaming Act of 2004 as unconstitutional.
The bill provided that either 2 percent of gross terminal revenues from slots or $10 million, whichever was more, would go to local government agencies hosting casinos. The provision was challenged for being detrimental to smaller “boutique” casinos and the Supreme Court found that it was not in line with the state’s TaxUniformity Clause.
The state Legislature was originally given until Jan. 27 to correct that section of the bill, but was given a fourmonth extension to Memorial Day at the behest of leaders in both chambers.
Meanwhile, state Sens. Tom Killion, R-9 of Middletown, Tom McGarrigle, R-26 of Springfield, state Rep. Nick Miccarelli, R-162, of Ridley Park, and retired state Rep. William Adolph, R-165 of Springfield, were able to secure a memorandum of understanding for Chester and the county with Chester Downs and Marina LLC, the owner of the Harrah’s Philadelphia Casino and Racetrack in Chester.
Harrah’s has agreed to continue to pay the local share assessment until the new law comes into effect, which equates to $4.3 million for the county and $10 million for Chester.
“Harrah’s has been a great partner,” said Chester Mayor Thaddeus Kirkland Friday. “They have not skipped a beat, nor do they wish to skip a beat on their terms, so we have been grateful for that.”
Kikrland said the city has not been involved in crafting the fix to the gaming law, but has been assured by legislators in the House and Senate that it is “priority one” for this session.
“The big thing now is not letting it get caught up in the individual politics of individual counties,” he said. “We’re just waiting to hear back from the legislators now, but I’m confident that we will be made whole.”
“The easy fix is simple: You come back, you pick one or the other, either $10 million or the 2 percent as the local share,” said Delaware County Councilman John McBlain.
But once you open up the gaming legislation to changes, said McBlain, a whole slew of competing interests begin to assert themselves. Among them are proposals to put what are known as video gaming terminals into local watering holes and allowing Internet gaming that would be licensed through the casino facilities.
Both of those proposals have the potential to draw dollars away from the brickand-mortar facilities that pay the host fees and could hurt local revenues, said McBlain, as could further dividing the overall pie to include counties that do not host a casino, another proposal on the table.
“Obviously, our interest is in ensuring the revenue streams to the county are preserved,” McBlain said.
Killion said he has already introduced one bill favorable to Internet gaming and plans to put forth another soon dealing with the local share issue. But he and McGarrigle noted Friday that the changes come in the midst of a particularly grueling budget season, with the state starring down a projected $3 billion revenue shortfall.
“There’s a lot swirling around out there,” said Killion. “It’s budget time and some folks are thinking about finding revenue through the new gaming bill. Some folks are for VGTs, some folks, like me, are for Internet gaming, but I really believe, and that’s why I’m dropping a second bill, that we should deal with those issues separately … One is straightforward, the other one is a debate.”
Santora, who supports VGTs, said he agrees wholeheartedly.
“One hundred percent, they’ve got to be separate,” he said. “But here’s the issue – there are certain areas that have casinos in their area, but they’re not getting the local share and they want that fixed as well. So as long as everybody’s on the same page as far as how we get those casinos in those areas to be paying their local share, I think we’ll be fine.”
Santora noted the House has been trying to get new laws on the books for Internet gaming and VGTs in recent years, but the Senate has not been receptive. The House did recently pass a bill that would allow Internet gaming on tablets in airports that should go to the Senate next week, he said.
“We thought the best thing to do was to send them over a casino bill that generates some revenue and to let them load it up with what they can accomplish, and then we’ll look at it from our perspective,” he said.
On the VGT issue, Santora said it would come down to how the industry can be regulated and how revenues are distributed, but he believes it could be a boon to tavern owners who have been left on the sidelines for too long.
“My personal opinion is that VGTs would be bad for Harrah’s,” said McGarrigle. “I think if you have thousands of VGTs scattered around southeastern Pennsylvania, it certainly would take dollars away from Harrah’s, which would be bad for the local share.”
McGarrigle said that share is essential to the budgets of both Chester and Delaware County, so retaining it as much as possible is key in his mind.
“We are definitely going to straighten it out, but the timing of it is essential, especially for the city of Chester,” he said. “We’ll be back up there (in Harrisburg) in two weeks and hopefully we’re closer to getting it together then.”