Pa. House passes bills to legalize slot machines

Martha Raffaele

Monday, July 21, 2003 | 9:55 a.m.

HARRISBURG, Pa. -- The state House of Representatives on Saturday handily approved legislation to raise $1 billion for property-tax relief by legalizing slot machines at 11 locations across Pennsylvania, but the bills face an uncertain future in the Senate.

No further action is anticipated right away. The Senate, which passed far more conservative slots and property-tax relief bills last month, is in recess and not expected to reconvene before July 28.

The House bills were approved in a marathon voting session that stretched from Friday afternoon into the wee hours of Saturday morning.

Roughly one-third of the Republican majority joined most of the House Democrats in approving the slots bill 120-81. The separate bill that outlines how the revenue would be distributed among the 501 school districts later passed 198-3.

West Virginia Lottery officials are projecting flattening revenue growth, largely from competition as Pennsylvania and other border states consider legalizing video slot machines. Some analysts say state video lottery profits, expected to top $400 million this year, could drop 40 percent.

House Speaker John M. Perzel, R-Philadelphia, and Democratic Gov. Ed Rendell said passage of the House gambling bill was critical to moving forward with the property-tax compromise hammered out by House leaders and the governor.

"We could not offer this property tax relief without the substantial proceeds anticipated from legalization of slot machines," Rendell said.

Both bills now move to the Senate, but spokesmen for Senate leaders said Saturday that it remains unclear what, if any, action the Senate will take.

The Senate slots bill would allow the machines at eight racetracks to generate an estimated $300 million in the first year.

All three leaders of the Republican majority opposed even that bill, and two of the six Republicans who voted for it with the Democratic minority have said they would withhold their crucial votes from any bill that allows additional slots parlors.

Also, Senate Democrats and some Republicans want to include language banning contributions to political candidates by anyone with financial ties to the gaming industry -- a provision excluded from the House bill.

"I don't know where we go on gambling," said J. Andrew Crompton, counsel to Senate President Pro Tempore Robert C. Jubelirer, R-Blair.

The Senate property-tax relief bill, which Republicans pushed through on a nearly straight party-line vote, would allow voters in most school districts to replace part of their property taxes with higher local income taxes. No state funds would be involved.

"The ball's back in our court," said Crompton. "We'll have to work through the outstanding issues."

Although gambling opponents conceded early on that the House slots measure would pass, they still made their case, arguing that it was a get-rich-quick scheme whose social costs -- among them, crime and gambling addiction -- would far outweigh any property-tax benefit to homeowners.

"The expansion of gambling has strings attached. The strings are moral, social and economic. Have we become so desperate that we have to allow a vice to support our budget?" said Rep. Matthew Baker, R-Tioga.

But supporters said lawmakers were left with few alternatives for lowering property taxes, given the lack of support for raising other taxes to boost the state's share of school funding.

"No matter what we do, we have to pay for it," said Rep. Christopher Sainato, D-Lawrence. "People in Pennsylvania don't want to pay a higher personal income tax, they don't want to pay a higher sales tax, so you have to find (other) sources of income."

The House plan would allow slots at each of nine racetracks and two others, unspecified sites in Philadelphia and the Pittsburgh metropolitan area. A new, five-member state gambling board -- one member appointed by the governor and four appointed by legislative leaders -- would decide who could buy the $50 million licenses.

In addition to the state's share of the revenue from the racetrack slots, the track owners would keep 46 percent, 18 percent would go to subsidize purses at the tracks, and 2 percent would be earmarked for municipalities in areas where the tracks are located.

Pennsylvania now has four racetracks -- Philadelphia Park in Bensalem; Penn National Race Course near Harrisburg; Pocono Downs near Wilkes-Barre; and The Meadows in southwestern Pennsylvania. Another track is licensed in Chester but not yet open.

Of the money generated from the Philadelphia facility, $17 million annually would go toward an expansion of the Pennsylvania Convention Center. The Pittsburgh-area facility's revenue would provide short-term financial relief for the city, and $15 million annually for a new hockey arena and continuing expenses for Pittsburgh's new convention center.

The companion bill would require school districts to raise their local income taxes by at least 0.1 percentage point to qualify for shares of the state money.

The state money would be paid out to the local districts in multiples of the amount of the local tax increase, based on a formula that would give the biggest reductions to the poorest districts. The average tax reduction would be around 20 percent.