Budget bill delayed by debate on taxing table games

HARRISBURG - Gov. Rendell said yesterday that the last budget bill has to be on his desk by Friday.

Some legislative leaders said that might be "a bit optimistic."

Sound familiar?

The back-and-forth over the final snag in the state budget dragged on yesterday, with Rendell vowing to veto any bill that doesn't produce at least $200 million for the state this year from poker and other newly legalized table games at Pennsylvania casinos.

And, according to his figures, that means that each casino would have to pay an up-front fee of $15 million and a tax rate of at least 16 percent on the games.

His proposal is the floor, and it will be up to lawmakers to erect the ceiling.

Rendell said he wants to achieve a "pretty delicate balance" between raising enough revenue and still making it profitable for the casinos to add table games.

"We don't want to kill the golden goose here," Rendell said, noting that other states, notably New Jersey, tax table games at a lower rate.

The Garden State taxes gross gambling revenue - both from slots and table games at Atlantic City's casinos - at 9.25 percent.

Pennsylvania has a 55 percent tax rate on gross slots revenue. Casino operators here have argued they need a much lower tax on table games to make a profit because they generate far more jobs than slot machines do. Gaming analysts have estimated that every table will require at least eight workers to staff round-the-clock.

There are nine operating casinos in Pennsylvania. A licensing fee of $15 million per casino would generate $135 million, along with an additional $7.5 million from each of two planned small gambling halls known as resort casinos, for a total of $150 million. The remaining $50 million would be in revenue.

Ken Smukler, executive director of the Pennsylvania Casino Association, which includes SugarHouse in Philadelphia, Mount Airy Casino Resort in the Poconos, and the Rivers in Pittsburgh, said the group is still pushing for a $10 million licensing fee and 12 percent tax on table games.

"We have not made any play with respect with the timetable," Smukler said yesterday. "We're not saying get it done now. We're just waiting to see what the House and Senate will do. We are entirely focused on the license fee and tax rate."

Rendell's figures are between what the state House and Senate have sought to impose. The majority-Democratic House has prepared a bill seeking a 34 percent tax rate; the Republican-led Senate favors 14 percent, with 12 percent going to the state and the rest to local municipalities.

House Democrats have signaled they could settle for a rate in the high teens.

The governor made his comments at an unrelated news briefing outside his Capitol office just before he was to meet with legislative leaders on the table-games issue.

At the meeting, which lasted about an hour and a half, Rendell outlined his minimum revenue threshold for table games and said he wanted a bill on his desk by the end of the week.

Afterward, House Speaker Keith McCall (D., Carbon) said the governor's timeline might be "a bit optimistic."

"We agree it needs to be done as quickly as possible, but a table-games bill that doesn't raise enough revenue would be almost as bad as no bill at all," McCall spokesman Bob Caton said.

"All sides agree that a $15 million license fee for casinos to add table games is appropriate, but there will be more meetings held soon on the tax rate."

Caton added, "Speaker McCall believes that the 12 percent rate simply will not raise enough funds to help fill the budget holes the money is needed for, and, of course, the governor agrees with that contention."

Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware), said, "It was a good meeting, although the governor left about 10 or 15 minutes into it, and at least one additional meeting will be needed."

Rendell spokesman Gary Tuma said last night the governor had to leave the meeting early for business in Pittsburgh, including a television interview.

Table games are the final piece of Pennsylvania's budget puzzle, and Rendell has good reason to want to resolve the tax rate quickly: Finalizing table-games legislation has become linked to freeing up about $730 million in spending for state-related schools, museums, and hospitals, known as "nonpreferred" items in budget jargon.

The $27.8 billion spending and revenue plan that the governor signed, 101 days late, on Oct. 9, and which started July 1, included every measure except table games and nonpreferred spending.

"We hope to have our appropriation resolved as soon as possible," said Ray Betzner, spokesman for Temple University, which is waiting to receive about $180 million in state funding.

It appears likely that Pennsylvania state government will announce another round of layoffs soon.

Gov. Rendell said yesterday that he might make an announcement on layoffs by the end of the week. The state has laid off more than 300 employees since July because of spending cuts.

The state budget signed by Rendell Oct. 9 cuts overall state spending by nearly 2 percent, and slashes environmental-protection operations by almost 14 percent. Environmental Protection Secretary John Hanger says there will be additional layoffs. His agency has more than 2,770 employees.

SOURCE: Associated Press

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