Pennsylvania House members got no closer to approving a gambling bill this past weekend. Pennsylvania House Speaker Mike Turzai, a Republican from Alleghany, held a special weekend session to discuss the state’s continuing budget standoff.
House Bill 271 is the so-called omnibus gambling bill, which would approve online casinos, online poker sites, daily fantasy sports, and tablet computer gambling at airport terminals. H271 might even include 10 satellite casinos, though that provision has less support. Video gaming terminals (VGTs) were discussed throughout June 2017, but appear to have fallen out of favor in recent weeks.
Meanwhile, some Republican lawmakers are challenging the basic assumptions of the past two-plus months. Those GOP members are against an expansion of “sin taxes” on alcohol and gambling, while also opposing their House leader’s plan to borrow money. Thus, the omnibus gambling bill might never pass into law.
Gambling Bill in Wolf-Corman Agreement
Last week, Governor Tom Wolf (D) and Republican Senate Leader Jake Corman agreed on the broad outline of a spending bill. That agreement would have ended a 3-week impasse on funding the state’s $2.2 billion spending deficit.
Speaker Mike Turzai has taken a “No New Taxes” stance in the budget talks, while carrying most of his GOP caucus with him in the negotiations. Turzai (pictured left) wants to borrow $1.5 billion to make up most of the deficit. He proposes to collect the rest in alcohol and gambling taxes, which comes from an expansion of both in the state.
Concerns about Pennsylvania’s Credit Rating
Gov. Wolf (pictured right) and Senate Leader Corman both warn about borrowing more money, because it could lead to a downgrade in the state’s credit rating. That would make borrowing more expensive and cost taxpayers in the long term.
Wolf maintains his original stance that raising taxes in some form is needed, a stance which most of the Democrats in the legislature support. Politicians have split on the kind of new taxation, though. One group of Democrats and moderate Republicans are calling for a severance tax on the Marcus shale oil.
The shale oil tax is a controversial suggestion among staunch Republicans. The Marcus shale field has made Pennsylvania the second-largest gas-producing U.S. state. Republicans do no want to harm the natural gas interests in the state with a new tax.
Kate Harper Wants Shale Tax
State Rep. Kate Harper, a Republican from Montgomery, said she is not going to vote for plan to borrow $1.5 billion, because it is fiscally unsound. Rep. Harper would prefer to impose a severance tax on production from the Marcellus Shale, because Pennsylvania would be paying its bills immediately and not leaving it for the next generation.
Harper said, “I don’t think you should borrow money for operating expenses without exploring a severance tax. It doesn’t strike me as a very sensible way to budget.”
State Rep. John Taylor, a Republican from Philadelphia, echoed the sentiments of many rank-and-file members of the legislature when he called for more ideas than the ones that have been considered during the three-week standoff. Rep. Taylor said, “At some point, there’s going to have to be more options on the table than what our leaders are currently talking about.”
Tomlinson Wants Higher Income Taxes
State Senator Robert M. Tomlinson, a Republican from Bucks, said that he does not like either a tax on the Marcus shale reservoir or the borrowing of a billion-and-a-half dollars. Sen. Tomlinson called for raising the income tax from the current 3.07% to just over 5%.
Because a state income tax is tax deductible on federal income taxes, Tomlinson said, “I think the fairest and easier tax to do is the personal income tax.”
Mike Turzai Running for Governor
The budget talks have major implications for Pennsylvania’s credit rating and gambling industry, but also for electoral politics. It is all-but-certain that Mike Turzai is planning a run for Pennsylvania governor against Tom Wolf, who plans to run for reelection in the 2018 midterm elections. Thus, Turzai and Wolf are maneuveuring with a mind towards their political arguments as November 2018 approaches.
The longer the standoff continues, the more likely the gambling bill is left out of the state budget altogether. While it appears to be the most sensible and sustainable option proposed, even Gov. Tom Wolf has questioned the gambling provisions at times.
Tom Wolf on Gambling Revenues
Earlier this month, Gov. Tom Wolf said, “I want real revenue, and I want net revenue. I don’t want anything that we do in gaming or gambling to interfere with the revenues that are already in place. If it just cannibalizes and takes from one bucket called gambling to another, the commonwealth isn’t doing anything more than it has in the past.”
That was mainly in response to the VGT legislation, but it also could include the satellite casino provisions which were to replace the VGTs. Without the satellite casinos, the state budget is going to come up short. If that happens, lawmakers might look at an entirely different model for making up the budget deficit.
No option is off the table, it would seem, but that means no option is absolutely certain to be in the final draft of the budget. HB271 could be left out of the budget law entirely.
