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No slots money for taxes in '07-08
HARRISBURG - Slot-machine gambling in Pennsylvania will not provide enough revenue to allow school districts to cut property taxes for the 2007-08 school year, Gov. Ed Rendell's top budget official said Friday.
The state budget secretary, Mike Masch, made the legally required certification in a letter to Education Secretary Gerald Zahorchak, disappointing some state gambling regulators who had hoped that the reductions would be possible in the coming school year.
Masch also used the opportunity to press the case for an increase in the state sales tax, as Rendell proposed in February as a way to offset further cuts in rapidly rising school taxes.
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However, many legislators say it is a tough time to increase taxes with so many freshman legislators in office and a new Democratic majority in the House wary of taking a risky tax vote.
One-third of Rendell's proposed percentage-point increase in the sales tax, or about $420 million, would help pay for public schools and offset property tax cuts. The rest would go into the state's main bank account to help make up for what Rendell says is declining federal support for health care for the poor.
Sen. Gibson C. Armstrong, the Lancaster County Republican who chairs the Appropriations Committee, said there isn't much support for a $1 billion-plus sales tax increase when only a fraction of it will offset school taxes.
"To me, it shows that (Rendell's) projections were off, which we knew they were, and they overestimated the revenue from slots," Armstrong said.
The state budget secretary is required by a June 2006 law to certify before April 15 each year whether the state will distribute slots revenue in the next school year in the form of tax cuts for homeowners and people who pay Philadelphia's wage tax.
Part of the certification involves determining whether the state's Property Tax Relief Fund will hold at least $570 million each Oct. 15, three-quarters of which can be used for tax cuts and the rest of which must be held in reserve.
As of Friday, the balance in the state's Property Tax Relief Fund was $115 million, Masch said. He projected that another $330 million would come in during the next six months, but the combined amount would fall short of the legal requirement for a distribution.
If the Legislature approves Rendell's call for a sales tax increase of one percentage point, the $420 million would be added to the gambling money and be used to cut school taxes in the 2007-08 year.
However, Masch's estimate of about $445 million in gambling money by Oct. 15 assumes each of five approved licensees for freestanding casinos pay a $50 million fee.
Payment is on hold while the Supreme Court considers various legal challenges to the licensing decisions made in December by the Pennsylvania Gaming Control Board.
In addition, Philadelphia City Council has authorized a question on the May primary ballot that could scuttle the construction plans of two casinos approved by the gaming board. The gaming board is challenging the referendum in court.
