Pennsylvania’s Rendell Signs Table-Games Bill; State Gets Balanced Budget

With a new table-games bill, Pennsylvania now has a balanced fiscal 2010 budget after more than six months of debate and legislative stalemate and just one month before Gov. Edward Rendell releases his fiscal 2011 budget proposal.

The governor Thursday signed into law a bill that will allow slot casinos and racetracks to offer table games, such as blackjack and poker, generating nearly $250 million this fiscal year from one-time licensing fees.

Larger casinos and racetracks will pay $16.5 million to conduct up to 250 table games while the state will charge smaller resort casinos $7.5 million for operation of up to 50 tables. Those smaller casinos can begin offering table games in 2017.

The legislation includes fourteen gambling facilities: six current racinos and one future racino in Lawrence County; three current slot casinos and two new casino developments in Philadelphia; and two smaller resort casinos that have yet to open.

Pennsylvania will implement a 16% tax on gross table-games revenue, with the state gaining 14% of that levy. Counties and municipalities will receive 1% each. After two years of table-games operation, the state’s portion will drop to 12% with local governments continuing to receive 1%, according to a summary of the legislation.

Once officials fill the $250 million budget gap, table-games revenue will then help restore the state’s $750 million rainy-day fund, which the administration depleted earlier this fiscal year. Once the reserve fund totals $750 million, table-game revenue will then flow into the state’s property tax relief fund.

“I don’t believe that we should use gaming revenues for anything other than property tax relief, but given the extraordinary circumstances, it’s important that we use this money in the short run to help us get out of our general fund challenge,” Rendell said during a press conference following his signing of the bill. “I am pleased that the bill, once the rainy-day fund reaches $750 million, transfers table-games revenues over to the property tax relief fund.”

Along with delaying completion of the fiscal 2010 operating budget, the table-games initiative postponed for nearly three months passage of Pennsylvania’s annual capital debt act. Lawmakers passed that bill on Dec. 16, and officials are now working on the state’s first new-money deal for fiscal 2010. The state Wednesday will sell $900 million of debt, including $604 million of taxable Build America Bonds.

Rendell on Oct. 9 signed a belated $27.8 billion fiscal 2010 budget with the expectation that lawmakers would pass a table-games bill shortly thereafter as the additional revenue would help fill a budget gap of about $250 million.

The governor at that time held off on allocating aid to higher educational and cultural institutions until passage of table-games legislation. On Dec. 17, he approved allocations to universities, colleges, and museums, as well as other entities that had been waiting since July 1 for state support, with the pledge to slash 1,000 state jobs if the legislature failed to pass a table-games bill by Jan. 8.

Rendell said he wasn’t happy signing a “sin tax” bill to generate revenue for the state. Last year, he pushed for a personal income tax hike to help balance the fiscal 2010 budget. Once that initiative failed to gain support, the governor promised to sign any legislation that would generate sufficient revenue for the state, no matter what type of tax hike or tax implementation that lawmakers chose to pass.

“The people of Pennsylvania should breathe a great sigh of relief today, but no celebration,” Rendell said. The governor signed the bill behind closed doors, as opposed to in public.

Rendell will give his final budget address on Feb. 9. His second term as governor will end in January 2011.

For reprint and licensing requests for this article, click here.
Pennsylvania
MORE FROM BOND BUYER