Pennsylvania Update: One Representative Taking the Reigns

by Jim Hall

Pennsylvania Representative decides to take matters into his own hands and create legislation for casino tax levy issue.

Pennsylvania is running out of time to repair a tax levy issue that first began back in September. In the fall of last year, the state Supreme Court decided to rule that the local tax assessment paid by casinos each year to local municipalities and cities is unconstitutional. Lawmakers have had several months to solve the problem but have failed to do so, with the last deadline coming up next month.

Back Story

The Mount Airy Casino of Pennsylvania decided to file a lawsuit in order to protest the tax levy as they felt it was unfair to lesser performing casinos. Basically, the 12 casinos of the state had to pay 2% of slot gaming revenues to their host city or $10 million, whichever is the higher amount. For smaller casinos, the 2% was never enough, so they end up paying $10 million. The court ruled that the assessment tax was unconstitutional and gave lawmakers until late January to come up with a solution.

So from September to January, lawmakers took time to discuss the tax along with other gambling issues such as expanding to offer online gaming as well as video gaming terminals. It seemed lawmakers could not decide as to what should be offered in the state so nothing was done in any way, particularly in the case of the tax levy.

Lawmakers asked for an extension and were given until May 26th to find a solution. This date is slowly approaching and nothing has come about. Reportedly, lawmakers are working on an omnibus legislation that will cover a number of topics but nothing has been introduced as of yet.

Enter Representative Hawkins

Representative Patrick HarkinsRepresentative Patrick Harkins represents Erie County, an area of the state that receives around $11 million a year from the Presque Isle Downs & Casino. This money is much-needed and could be at risk if the tax issue is not taken care of. To try and remedy the situation, Harkins has proposed a stand-alone bill. This way, if an omnibus approach does not work, there is still legislation in place to remedy the share tax situation before the May deadline.

With Harkins proposal, the Category one casinos like Presque Isle and Category 2 casinos will have to pay a flat fee of $10 million. This money would still be paid to host communities. Hawkins has also broken down how the money would be distributed for his county in the measure.

Currently, omnibus legislation is reportedly in development and HB 271 was recently sent to the Senate by the House for consideration. The bill would authorize gaming changes including allowing gambling at airports. The Senate would have the ability to amend the bill which could include the local share tax option. The Representative expects the Senate to send something back within the next few weeks as the deadline draws near.

Any bill that is sent back by the Senate to the House will be reviewed within the House Gaming Oversight Committee. Harkins holds the position of minority chairman of the committee. The committee has been working as of late to find out how communities use the funds provided by the casino tax. Meetings have been held with public officials to determine the effect if the tax is not fixed.

It will be interesting to see if lawmakers will be able to meet the May deadline. There is basically one month left to make changes and the state lawmakers do not seem to be any closer to coming up with a way to fix the share tax as well as any other gambling expansion.