State budget remains flawed without table games decisions
The workability of the 2009-10 state budget depends in part on revenue from the introduction of table games at the state's casinos. Some state residents might be wondering whether it will take until Dec. 23, the date when state lawmakers finally reached an agreement on school funding in 2003, to settle two crucial unresolved issues tied to those games: the amount of the license fee and the tax rate for the games.
How quickly those issues are resolved will determine how much of the estimated $200 million that table games are expected to inject into the state coffers this fiscal year will actually materialize.
Under responsible circumstances, the General Assembly should have had those issues detemined by the constitutionally mandated budget deadline of June 30.
Trouble is, the Legislature and Governor's Office displayed gross irresponsibility — and violated the state constitution — in failing to meet the deadline — by 101 days.
A budget deal wasn't achieved until Oct. 9.
Now, a week after that agreement was forged, the table games revenue component remains a big question mark. At the same time, the state is withholding money from a number of significant entities until the unresolved table games issues are settled — continuing to inflict financial hardship on many.
Among those whose funding is being delayed are the University of Pittsburgh, Penn State University, the Carnegie Museums, the Children's Institute of Pittsburgh and groups in Philadelphia.
Thus, while the 2009-10 budget debacle is technically over, it continues to rear its ugly head.
The basic question surrounding the two major table games issues is whether lawmakers can establish a license fee and tax rate that the casinos will deem affordable.
None of the casinos are required to add table games, although the casinos would prefer to have them, in order to compete with table games states such as West Virginia.
It's in Pennsylvania's, the budget's and the casinos' best interests that the two numbers, when finally set, are reasonable.
When the basic casino license fee was set at the time casino gambling was approved for the Keystone State, some people remarked that the $50 million fee was dirt cheap, compared with what they believed the commonwealth could have earned in a competitive bidding process.
At this late date, the biggest criticism deserved by the Legislature in regard to the unfinished table games business is that the issues don't appear to have been given the proper amount of homework, despite the months available to do such work.
The bottom line remains: no table games, no table games revenue. The longer it takes for the table games issues to be resolved, the more that unfinished business could negatively impact the state's 2009-10 income from those games.
As proof of how much hasn't been done to effect a compromise, casinos still are pushing for a $10 million license fee and a 12 percent tax rate. Proposals emanating from lawmakers range from $15 million to $20 million for license fees, and a tax rate of 14 percent, 18 percent, 21 percent, or 35 percent.
The current situation broadcasts, for all to see, to what deep depths Pennsylvania government has sunk.
Although Gov. Ed Rendell and lawmakers purportedly agreed on a budget on Oct. 9, that agreement, in fact, remains hollow, as long as there are unresolved issues.
Without agreement on a table games license fee and tax rate, lawmakers are playing budget poker with a deck of blank cards.
