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Gaming law has been a bust

As Pa. officials tout a rise in revenue, they overlook the cost, and an unfair tax system.

This year will mark the fifth anniversary of Pennsylvania's gaming law, originally conceived as a way of protecting the state's horse-racing industry. Neighboring states such as Delaware and West Virginia had instituted slot-machine gaming to boost purses at their racetracks.

But the bill's initial intent got hijacked at some point. Signed by Gov. Rendell in July 2004, the bill was sold not as horse-racing protectionism, but as a tax-relief vehicle. Revenue from gaming, it was said, could be used to trim property taxes.

Written by the office of now-indicted former State Sen. Vincent Fumo, the bill expanded gaming way beyond the imagination of the framers of the horse-racing protection bill, who merely envisioned slot machines at the state's four racetracks. As it turns out, when slots casinos become operational in Philadelphia and Pittsburgh, Pennsylvania will have 61,000 slot machines - more than any other state except Nevada.

State officials say they are cutting taxes with gaming revenue. In fact, they are subjecting Pennsylvanians to higher taxes.

The government says nearly $1 billion in gaming revenue has been made available to trim property taxes, but it isn't fluttering down from heaven or being printed by the Federal Reserve. It's coming out of the pockets of Pennsylvanians who are walking into casinos, putting it into slot machines, and not getting it back.

Expanding gaming in Pennsylvania is simply an additional de facto tax - on top of the state lottery implemented many years ago.

There is work to be done on the issue of taxation in Pennsylvania, but it is not the work that Rendell, Fumo, and their brethren in Harrisburg have done - and that, in the end, can benefit only casino operators. Lawmakers must lead for the good of the entire public, not just a segment of it, and abolish the property tax as a means of funding public education in Pennsylvania.

The residential property tax is a regressive tax - that is, it taxes poor people at higher rates than it does rich people. Because of their lower property values, poor communities are forced to implement higher property taxes to raise enough money to fund their schools. And communities with high property values can afford to keep their property taxes lower.

In Allegheny County, for example, the borough of Wilkinsburg, which is predominantly poor and African American, had a 2008 school-district property-tax rate of 3.5 percent. A home valued at $100,000 there had an annual school property-tax bill of $3,500.

In Fox Chapel, a well-to-do, predominantly white suburb north of Pittsburgh that is home to the likes of Teresa Heinz Kerry, the corresponding rate is 2.03 percent. A $100,000 home in Fox Chapel has a school property-tax bill of $2,030.

So the school property-tax bill for a low-income resident of Wilkinsburg is 72.4 percent higher than the same bill for a millionaire heiress who lives in Fox Chapel.

In Montgomery County, where I live, consider the plight of Cheltenham Township, which has a school property-tax rate of 3.54 percent - the highest in the county. Compare that with well-heeled Lower Merion Township, which has a school property-tax rate of 1.89 percent, or a little more than half Cheltenham Township's.

Until we address this government-instituted disparity, which advances well-off communities and punishes poorer ones, there is really nothing for the state to be proud about on the issue of taxation.

The solution is to do away with the residential property tax and fund education with a tax on income. Then education could be state-funded on a per-student basis, ensuring that every school gets adequate funding without imposing gruesome property-tax rates on poorer communities.

You like to gamble? I'll bet such a change doesn't happen in my lifetime.