HARRISBURG - Even if the Legislature approves gambling-financed property tax cuts next week, homeowners should not expect significantly lower tax bills for at least a couple years, maybe longer.
Appointing a gambling commission, setting up its offices and rules, and deciding who should get gambling licenses are just a few of the first steps toward building parlors for the 61,000 slot machines that the Legislature seems poised to legalize next week.
But building the slots business up to the point where it generates the $1 billion a year that proponents hope to funnel into property-tax relief will take longer, according to gambling analysts and lawmakers. Exactly how long is unclear.
Also unresolved are the details of a companion bill to distribute the tax-relief money among school districts, which lawmakers also hope to pass before they break for summer recess.
"A lot of things have to be put in place before you see dollar one," said Mike Manzo, the chief of staff for House Democratic leader, H. William DeWeese of Greene County, who helped negotiate the deal.
In his 2002 election campaign, Gov. Ed Rendell proposed legalizing and taxing slot machines as a way to reduce the more than $5 billion in residential property taxes that Pennsylvanians pay to fund schools. In Philadelphia, the revenue from the slot machines could help reduce the city's wage tax.
For more than a year, disagreements among supporters have waylaid efforts to legalize slot machines. Lawmakers squabbled over whose district would get a slots parlor. And they fought over how to divide the revenue from the slot machines, which could end up funding development projects across the state and purses at horse-racing tracks as a way to revive that industry.
Along the way, the number of allowable slots parlors ballooned from eight to 14 to accommodate the demand from lawmakers whose votes were needed to pass the legislation. Meanwhile, opponents of gambling, including many Republicans, argued that the slots parlors would take money away from other businesses and spawn addicts.
Last year, the Senate and the House each passed a separate bill to legalize slot machines, but neither chamber could agree on the same piece of legislation, as is required to get it to the governor for a signature.
On Wednesday, lawmakers said they had reached a tentative agreement on legislation, and a bill was in the process of being drafted Thursday. They said they hoped to vote on it next week.
Under the agreement, a total of 14 licenses would be awarded to as many as eight horse-racing tracks, as many as five standalone sites and at two resorts. One license must go to a Pittsburgh site, and two of the standalone licenses must go to sites in Philadelphia.
The state would take 34 percent of the slots revenue to generate the $1 billion annually for property-tax relief - a goal that gambling analysts said Thursday they believe Pennsylvania can achieve.
Analysts point to Atlantic City, N.J., as one comparison: 42,000 slot machines there produced $3.3 billion in revenue last year, or $77,871 per machine. Using those numbers, Pennsylvania would need about 37,770 slot machines to reach $3 billion, half of which goes to the slots licensees and a third of which is earmarked for property-tax relief.
"I think (Pennsylvania) can do that because I think the market for the state under that mix is in excess of $3 billion," said Steven Rittvo, who is president of The Innovations Group, a New Orleans firm that studies the gambling industry.
Still being negotiated is a companion bill to distribute the state's share of the slots revenue to school districts to reduce property taxes. Democrats, who are supplying most of the support for a gambling bill, want both bills to be voted on side-by-side.
The schools would get gambling dollars according to a formula that would be part of the property-tax legislation.
Negotiators are still finalizing a variety of exceptions to spending restrictions on school districts that Senate Republicans want to accompany the gambling money, said Drew Crompton, a senior Senate GOP aide.
Another aspect of the developing legislation is a requirement that school districts raise local wage tax rates by a tenth of a percent and then lower property taxes by a corresponding dollar amount. Beyond that, the legislation will require school districts to hold a referendum to allow voters to decide whether to raise the wage tax rate further as another way to lower property taxes.
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Appointing a gambling commission, setting up its offices and rules, and deciding who should get gambling licenses are just a few of the first steps toward building parlors for the 61,000 slot machines that the Legislature seems poised to legalize next week.
But building the slots business up to the point where it generates the $1 billion a year that proponents hope to funnel into property-tax relief will take longer, according to gambling analysts and lawmakers. Exactly how long is unclear.
Also unresolved are the details of a companion bill to distribute the tax-relief money among school districts, which lawmakers also hope to pass before they break for summer recess.
"A lot of things have to be put in place before you see dollar one," said Mike Manzo, the chief of staff for House Democratic leader, H. William DeWeese of Greene County, who helped negotiate the deal.
In his 2002 election campaign, Gov. Ed Rendell proposed legalizing and taxing slot machines as a way to reduce the more than $5 billion in residential property taxes that Pennsylvanians pay to fund schools. In Philadelphia, the revenue from the slot machines could help reduce the city's wage tax.
For more than a year, disagreements among supporters have waylaid efforts to legalize slot machines. Lawmakers squabbled over whose district would get a slots parlor. And they fought over how to divide the revenue from the slot machines, which could end up funding development projects across the state and purses at horse-racing tracks as a way to revive that industry.
Along the way, the number of allowable slots parlors ballooned from eight to 14 to accommodate the demand from lawmakers whose votes were needed to pass the legislation. Meanwhile, opponents of gambling, including many Republicans, argued that the slots parlors would take money away from other businesses and spawn addicts.
Last year, the Senate and the House each passed a separate bill to legalize slot machines, but neither chamber could agree on the same piece of legislation, as is required to get it to the governor for a signature.
On Wednesday, lawmakers said they had reached a tentative agreement on legislation, and a bill was in the process of being drafted Thursday. They said they hoped to vote on it next week.
Under the agreement, a total of 14 licenses would be awarded to as many as eight horse-racing tracks, as many as five standalone sites and at two resorts. One license must go to a Pittsburgh site, and two of the standalone licenses must go to sites in Philadelphia.
The state would take 34 percent of the slots revenue to generate the $1 billion annually for property-tax relief - a goal that gambling analysts said Thursday they believe Pennsylvania can achieve.
Analysts point to Atlantic City, N.J., as one comparison: 42,000 slot machines there produced $3.3 billion in revenue last year, or $77,871 per machine. Using those numbers, Pennsylvania would need about 37,770 slot machines to reach $3 billion, half of which goes to the slots licensees and a third of which is earmarked for property-tax relief.
"I think (Pennsylvania) can do that because I think the market for the state under that mix is in excess of $3 billion," said Steven Rittvo, who is president of The Innovations Group, a New Orleans firm that studies the gambling industry.
Still being negotiated is a companion bill to distribute the state's share of the slots revenue to school districts to reduce property taxes. Democrats, who are supplying most of the support for a gambling bill, want both bills to be voted on side-by-side.
The schools would get gambling dollars according to a formula that would be part of the property-tax legislation.
Negotiators are still finalizing a variety of exceptions to spending restrictions on school districts that Senate Republicans want to accompany the gambling money, said Drew Crompton, a senior Senate GOP aide.
Another aspect of the developing legislation is a requirement that school districts raise local wage tax rates by a tenth of a percent and then lower property taxes by a corresponding dollar amount. Beyond that, the legislation will require school districts to hold a referendum to allow voters to decide whether to raise the wage tax rate further as another way to lower property taxes.
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