Pennsylvania governor tries again with slot machine plan

Marc Levy

Wednesday, Jan. 28, 2004 | 9:30 a.m.

HARRISBURG, Pa. -- Gov. Ed Rendell said Tuesday that his administration would combine elements of several stalled gambling bills into a single bill and use the revenue from legalizing slot machines to slash property taxes, fatten horse-racing purses and finance construction projects.

Although separate bills to legalize slots have passed the House and Senate, squabbling lawmakers have been unable to reach a compromise on a plan that would distribute gambling revenue to 500 school districts to cut property taxes and to Philadelphia to cut the city's wage tax.

The slot machine proposal was the centerpiece of Rendell's 2002 election campaign, but Rendell acknowledged that he waited until now to move in hopes that lawmakers who had promptly introduced bills last spring could reach agreement.

With lawmakers dug in on several issues, Rendell said he hoped his proposal would help reach an agreement that could pass both houses by the end of February and, after a gambling commission is set up, quickly collect fees from licensees that could be funneled toward property tax cuts.

"It is time for everyone to understand if we're going to make this work, we're all going to have to coalesce around an idea," Rendell told a Capitol news conference. "And that means giving some."

A draft bill would be ready to show to legislative leaders on Thursday or Friday, said Rendell's chief of staff, John Estey.

But resolving differences may not be any easier than it has been, and lawmakers and legislative aides from both parties in the House and Senate warned that any agreement would take negotiation.

Lawmakers showed no signs Tuesday of dropping the demands that collapsed gambling negotiations last month before lawmakers took a month vacation.

Since then, no serious discussions have taken place on the issue.

"I think it's gotten to the point where we need the governor to be at the table, exercising his political muscle ... because I think we may have gone as far as we can go without him getting involved," said Michael Manzo, the chief of staff for the House Democratic leader, H. William DeWeese of Greene County.

Mike Jeannot, the vice president of The Meadows, a suburban Pittsburgh track, called Rendell's proposal "encouraging."

"It's the only news we've had since December," Jeannot said. "We were wondering if the focus was lost."

Legalizing slot machines has long been regarded by horse-racing proponents as a way to prop up the dying industry by using revenue to balloon the purses. Theoretically, bigger prizes would attract better horses, which would attract bigger and more bets, as happened at tracks in Delaware and West Virginia.

In his campaign, Rendell seized on the issue as a way to relieve a property tax burden that, he said, has more than doubled in the past decade in a state where many residents are elderly and live on a fixed income.

Under Rendell's draft, 46 percent of the revenue would go to the operators of the slot machine parlors, 34 percent would go to the state for property tax relief, and 18 percent would go to the racing purses. The rest would benefit the area around the slots parlors.

His goal is to produce $1 billion each year to finance an average 23 percent reduction in property tax bills while the state's overall share of education funding would rise from 35 percent to 44 percent. In Philadelphia, the proceeds would subsidize a drop in the city's wage tax.

As a whole, Rendell's proposal is not substantially different from either of the bills that passed the House and the Senate last year, or a stalled compromise deal that was discussed last month.

Rendell is advocating licensing eight racetracks to open slot machine parlors, as well as four off-track sites -- two in Philadelphia, one in Pittsburgh, and one somewhere else -- that would be approved by the gambling commission. Thus far, four tracks are licensed and operating, two others are licensed but not built yet, and two other licenses have not been awarded.

The proposal does not include a provision to license Indian tribes to run gambling parlors. Senate Democrats support a provision for Indian gambling.