Pennsylvania budget talks hanging on deal on gambling bill
HARRISBURG — Pennsylvania’s 8-day-old budget stalemate was hanging Saturday on closed-door negotiations over legislation to authorize another big gambling expansion in the nation’s No. 2 commercial casino state, as anti-tax lawmakers hoped for hundreds of millions of dollars from the industry to narrow a yawning deficit.
Heavily lobbied legislation under construction behind closed doors involved a jumble of concepts, including authorizing up to 10 more mini-casinos around Pennsylvania with hundreds of slot machines and table games. The legislation offers a combination of license fees and taxes on gambling losses designed to prop up the state’s tattered finances, including the biggest one-year shortfall since the recession.
Senate President Pro Tempore Joe Scarnati, R-Jefferson, said there was “more or less” a deal among negotiators on the gambling legislation, though a draft of the legislation had not been made public. However, a spokesman for House Majority Leader Dave Reed, R-Indiana, said there was no agreement, and rank-and-file House Republicans reported hearing little from Reed and other House GOP leaders on the subject.
The clock is ticking: Democratic Gov. Tom Wolf has until midnight Monday to sign or veto the main appropriations bill in a $32 billion budget package that packs a 3 percent spending increase for the fiscal year that began July 1. He also can veto select amounts of money to keep it in balance or let it become law on its own, despite questions about the constitutionality of such a move.
Wolf is not saying what he’ll do if the Republican-controlled Legislature doesn’t produce legislation to raise the $2 billion-plus deemed necessary to balance last year’s shortfall and this year’s projected deficit. Meanwhile, the state government is facing the potential for another downgrade to a credit rating already damaged by its failure to deal with an entrenched post-recession deficit.
The House and Senate held brief voting sessions Saturday, and were expected to return Sunday, largely as a sidelight to the private budget discussions. Negotiations over other elements of the revenue puzzle were awaiting an agreement on gambling legislation, top lawmakers say.
Discussions have focused on a provision allowing the state’s licensed casinos to bid on licenses for up to 10 more mini-casinos in farther-flung areas, after Senate support was lacking for a House-backed measure to allow slot-machine-style video terminals at thousands of bars, truck stops and private clubs. It was not clear where the casinos could be, or would be, located.
Forthcoming legislation also was expected to include provisions making Pennsylvania the first state to both allow its casinos and its state lottery to bring their games to online audiences. It also would allow casinos to operate an online gambling parlor at an international or regional airport.
Pennsylvania already has 12 casinos bringing in more than $3 billion annually, more than $1 billion of which is tax revenue. It also has one of the nation’s biggest lotteries, with more than $4 billion in sales.
House Minority Leader Frank Dermody, D-Allegheny, said gambling legislation would only be agreed to as part of a larger deal that solves the state’s money problem.
“We’ve been kicking the can down the road for six years, we’ve been borrowing and we’ve been using smoke and mirrors to balance budgets for far too long,” Dermody said Saturday.
Many Republican lawmakers who otherwise might oppose an expansion of gambling see it as a better alternative than a tax increase.
“I hate it,” said Rep. Stephen Bloom, R-Cumberland. “I just hate it less than taxes.”
Waiting in the wings were proposals by Senate Republicans to borrow as much as $1.5 billion and by Democrats to raise taxes, including slapping a tax on Marcellus Shale natural gas production in the nation’s No. 2 gas state.
Wolf in February proposed a $1 billion tax package he framed as closing corporate loopholes and making corporations pay their “fair share.” Dermody also said a small income tax increase would make sense. Pennsylvania’s flat 3.07 percent income tax rate is lower than the top marginal rate in each of its six neighboring states.
Anti-tax leaders of the House and Senate Republican majorities, however, have not publicly supported a tax increase or tested support for one in their caucus.