Pennsylvania Gov. Edward Rendell is waiting for the legislature to deal him one last card in the state’s long-playing budget stalemate — a bill that would generate about $200 million this year by implementing blackjack and poker games at the state’s slot casinos.
The governor Friday was set to sign the fiscal 2010 bill after lawmakers approved the appropriations component. That budget includes future revenue from table games.
Officials anticipate a measure to add table games to slot casinos would help close a $200 million shortfall in the proposed $27.8 billion fiscal 2010 budget through one-time licensing fees and annual tax revenue.
House and Senate members continue to discuss the level of taxation and license fee amounts, with two gambling bills moving through the legislature.
While Rendell last week received the two main portions of the fiscal 2010 budget — a tax bill and a spending measure — he would need to sign those bills with the confidence that legislators would soon approve a table games initiative that would generate $200 million for the state this fiscal year.
“As long as he’s satisfied that the table games is in motion and that there’s a good faith commitment to getting it done, I think he would go ahead and sign the appropriations bill,” said Rendell spokesman Gary Tuma. “There are certain things that we can do to enable that signing, even though the budget is reliant on the table games revenue.”
Pennsylvania has been without a comprehensive budget since the fiscal year began July 1. Rendell signed an $11 billion budget in early August to meet payroll expenses and debt service costs for the fiscal year.
The Senate Friday passed SB 1033, a bill that would tax table games at 14%, with 2 percentage points of that tax going to municipalities.
The measure would also implement up-front license fees ranging from $7.5 million for smaller resort casinos to $15 million for racetracks and stand-alone gaming parlors. Sen. Robert Tomlinson, R-Bucks, is sponsor of SB 1033.
“The lower you keep the tax rate, the lower you keep the up-front fee, the more jobs you create and the more income that you create,” Tomlinson said on the Senate floor prior to the vote.
Conversely, another table games bill in the House includes a 34% tax on blackjack, poker, and roulette and would implement license fees of up to $20 million.
Lawmakers Friday approved the fiscal 2010 spending plan after passing the tax bill two days before.
To help boost revenue, the state will increase the cigarette tax to $1.60 per pack, a 25-cent increase, and apply the same tax on small cigars.
The tax bill also slows down the phase out of the capital stock and franchise tax, generating an additional $374 million this fiscal year and $550.6 million in fiscal 2011, according to the House Appropriations Committee.
The tax bill does not contain earlier revenue enhancement proposals, including a tax on natural gas drilling in the Marcellus Shale region, taxing small games of chance, and increasing the sales tax on admission tickets to arts and cultural events.
Moody’s Investors Service on Aug. 24 revised its outlook on Pennsylvania’s general obligation rating to negative from stable, pointing to the budget impasse and its plan to issue short-term debt in fiscal 2010 for cash-flow needs. The state has not used such financing since fiscal 1998.
Moody’s analyst John Ceffalio Friday said the agency would review the credit again once Pennsylvania heads to the market with upcoming bond deals.
“We’ll probably wait and take a look in a little more detail after the final budget is approved and we have a chance to talk with the state,” he said.
Pennsylvania has roughly $9 billion of outstanding debt. Moody’s rates the credit Aa2. Standard & Poor’s and Fitch Ratings assign AA ratings to the state, both with a stable outlook.
