The potential for table games at the city's two planned casinos has set off a struggle between the city and state legislators over control of the tax money generated from those gambling attractions.

Local legislators gathered at City Hall yesterday to defend provisions in pending legislation that would have the state Department of Community and Economic Development (DCED) dole out the city's 2 percent "local share" taxes on table games.

Mayor Nutter has made it clear to Gov. Rendell, leaders of the General Assembly and rank-and-file legislators from the city that he wants that local share to flow directly to the city government.

At stake is an estimated $3.6 million per year if the casinos - SugarHouse is being built in Fishtown, Foxwoods is planned for South Philly - each operate 100 table games, such as craps, blackjack and poker. The 2004 state gaming act allowed casinos to offer only slot machines.

The table-games legislation, amended and approved by the Senate last week, would have DCED distribute half the local share as citywide grants to government agencies and nonprofits for "education, child welfare services, crime prevention, health care clinics, workforce development and the arts."

DCED would issue grants for the other half to businesses and nonprofits within 1.5 miles of the casinos to pay for "community improvement projects, heath and safety projects and public interest projects."

State Rep. Mike O'Brien, whose district includes SugarHouse, said that that approach would help "inoculate" neighborhoods near the casinos from harmful impacts.

Legislators traditionally have significant influence with DCED about applications for state grants in their districts.

State Sen. Larry Farnese, whose district includes SugarHouse and Foxwoods, said that he was more interested in protecting neighborhoods than influencing how the money is spent. He added that "career bureaucrats" at DCED would call the shots.

Nutter yesterday said that Rendell called him last week with the leaders of the four legislative caucuses to ask if he wanted the table-games taxes to go directly to the city or through another agency.

"I said I want the revenue to come to the city because what in the hell else am I going to say?" Nutter said. "The city has fiscal challenges."

The state House is due to pick up on the pending legislation when it returns from the holiday break on Jan. 5.

Farnese and O'Brien each voted against the table-games legislation when it came up for votes in the Senate and House last week but now hope to influence how legislators in both chambers reconcile their conflicts on the bill.

Rendell thinks that it's better to have the city deal directly with the tax money, his spokesman, Gary Tuma, said yesterday.

The anticipated table-games revenue - $250 million that would include a $16.5 million fee for casinos and a starting state tax rate of 14 percent - was part of a larger deal to end a state budget standoff in October.

Rendell last week warned legislators in a letter that he would furlough 1,000 state employees and make other budget cuts if the table-games legislation is not approved by Jan. 8.