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(July 2004) Pennsylvania’s Big Gamble is underway.

After over a year of mostly behind-the-scenes political maneuvering, the legislature has approved and Governor Ed Rendell has signed into law two of the Governor’s 2002 campaign promises – school property tax relief and a plan to expand gambling.

A once-modest plan has grown. It started over two years ago as a proposal for up to 24,000 machines at slot machine venues at the state’s four existing horseracing tracks and possibly four new tracks. Now, the final plan calls for up to 61,000 machines at up to 14 locations: 7-8 track, 4-5 non-track, and 2 small resort venues.

The potential impact of this new law on Pennsylvania’s future is big.  Just how big?  IssuesPA has followed the proposal since it first arrived on the scene.  Here’s what the new law means for Pennsylvanians.

It means more than just property tax relief, doesn’t it? 

Yes. Though the gambling plan – ultimately named The Pennsylvania Race Horse Development and Gaming Act – was sold to the public as relief from school property taxes for homeowners, more than homeowners get a piece of the action.

Among the beneficiaries:

• Venue licensees and investors
• Track operators and owners of winning horses, who will benefit from increased purses
• Horse organization members, jockeys and drivers
• Counties and municipalities where slots venues will be locate
• Volunteer fire companies and local law enforcement organizations
• Economic development projects that stand to benefit from funds set aside for Philadelphia, Pittsburgh, and other tourism- and economic development-related projects throughout the state
• Homeowners statewide, although in Philadelphia homeowner beneficiaries are primarily limited to low-income seniors
• Those who pay the city wage tax to Philadelphia
• Local governments – school districts, townships and counties – with qualified forest and park land within their borders

In addition, the new law sets aside funds for compulsive gambling treatment and for suburban Philadelphia school districts to provide Sterling Act relief.

So who pays?

As with most new programs, there are those who will benefit and those who will pay for this program.

• Gamblers lose – big time. Regardless of where they come from, they’ll have to come by the busload – and they’ll have to gamble big and lose big! Gamblers must wager $30 billion and lose $3 billion per year to achieve the oft-cited goal of $1 billion for property tax relief (click here for more).
• Working renters, except those who work in Philadelphia, will pay more in taxes because of the required increase in the local earned income tax, but will see no decrease in housing expenses.
• Although working Philadelphians will get some relief through lower wage taxes, most Philadelphia homeowners will miss out on property tax relief. Instead, working Philadelphians will get some city wage tax relief. Only those who qualify for the Property Tax and Rent Assistance for Older Pennsylvanians Program will realize property tax relief.
• School districts don’t necessarily win. Changing sources of funds is not education finance reform. Dollar for dollar, the bottom line for school districts doesn’t change; there’s no new money for schools in this new law. What is new is the backend referendum, which requires voter approval for future school tax rate increases above cost of living increases, except in limited circumstances. And note this: school directors will lose some of their authority.

 Is this what Pennsylvanians wanted?

There’s little question Pennsylvanians support expanded gambling. In a recent IssuesPA/Pew Poll, over 6 in 10 Pennsylvanians said they supported slot machines in the state. Other polls showed similar results. But how would state residents spend gambling revenues? In its poll, IssuesPA/Pew asked those taking the survey to identify the best use of gambling revenue in Pennsylvania, and here’s how they responded compared to what’s in the recently-approved legislation to expand gambling.

Is this new law good public policy?

That remains to be seen. Will the slots attract dollars and investment from outside the state? Will gambling establishments add to the quality of life in Pennsylvania? Will gambling increase the economic viability of Pennsylvania’s communities and citizens?

The Governor and legislature have pulled the lever.  Pennsylvanians now must wait and see what payoffs are coming.

It’s a gamble – Pennsylvania’s Big Gamble.