Progress in Pennsylvania

Pennsylvania lawmakers worked late Wednesday and managed to achieve some progress in both the House and the Senate as they redoubled efforts to find consensus on the budget funding differences that have plagued the state for the past four months (see previous  reports).

In the Senate, lawmakers made some concessions in passing gambling expansion bill H271 on a vote of 31-19 and sending it back to the House, where it was debated in the House Rules Committee and sent to the House floor.

However, after debate that lasted until just before midnight the House decided to postpone a vote until this (Thursday) morning to give representatives more time to mull the 470-page legislation.

House Gaming Oversight Committee chairman Scott Petri warned lawmakers not to pass something that they had not read, and that the bill carried a raft of unintended consequences.

“If you pass this bill, you will see an explosion of gambling in Pennsylvania like you’ve never seen before,” Petri said.

In summary, H-271 makes provision for the following:

* Online gambling and daily fantasy sports licensing and regulation are included;

* Online lottery sales are included;

* Online sports betting is included subject to changes in current federal law;

“ Concessions have been made on the controversial video gaming terminal issue, and VLTs at qualified truck stops are approved;

* Tablet gambling in designated areas at airports is approved;

* Up to ten new land mini-casinos or satellites are authorised;

* Tax rates based on GGR are proposed, with table games and poker drawing 14 percent plus 2 percent regional tax; and online slots high at 52 percent plus 2 percent regional fee.

* Three categories of online gambling licenses are proposed: online slot activity; online house-banked table games and online, peer-to-peer games.

* Existing Pennsylvania gambling licensees will have first crack at the new licenses, and have 90 days to apply for all three categories at a cost of $10 million. After that, the licenses will be separately available at $4 million each. After 120 days “qualified entities” outside the state can apply for licensing at $4 million per category;

Associated Press reported that the bill’s license fees and taxes on higher gambling losses is projected to net upward of $200 million a year for Pennsylvania, a state that already netted $1.4 billion in taxes from the industry last year.

The gambling expansion bill is one element in a package of bills that lawmakers say will fill the $2.2 billion budget deficit.

Early work in the Senate Wednesday resulted in reluctant approval for a House proposal to raise $1.5 billion through borrowing and assorted other tax increases of a more recurring nature projected to yield around $140 million a year.

Whether Gov. Tom Wolf will find that acceptable remains to be seen; he has been opposed to excessive borrowing in the past.

Along with tapping $500 million from off-budget funds, Senate Majority Leader Jake Corman said the gambling, tax and borrowing package should carry the current year’s spending, as well as next year’s.

“This should bring closure to the budget,” Corman said.

With perhaps a dozen budget-related bills passing the House and Senate this week, Gov. Wolf’s office said he would not approve the package without careful evaluation and study.

The office revealed that a recent credit downgrade as a consequence of the budget funding impasse means that the state will be paying an additional $50 million a year in debt servicing costs.

Related and similar