A Pennsylvania newspaper has found a majority of homeowners in the state are not benefitting from the legalization of casinos as promised by supporters in 2004. Through an analysis of property tax rates and rebates funded by gaming, the newspaper discovered property taxes, in most cases, are higher than they were prior to 2004.
Back then, casino proponents told voters they would see an average savings of $300 per year. In reality, the savings is approximately $180 as taxes have increased for homeowners by more than $1,000. The data was gathered from the Departments of Education and Revenue, and the Tax Equalization board.
Pennsylvania Governor Tom Corbett said the law to legalize casinos was originally written for horse racing.
“It was never about property tax relief,” he said. “It started out with the horsemen to save to racing industry.” Corbett more or less admitted casinos were thrown in the pitch to secure votes.
One senator told voters Pennsylvania homeowners would see property tax relief total $1 billion per year by 2010. In 2013, the relief had reached $778 million.
The casino pie may not be serving homeowners, but it is dishing out the revenue for the state at large. Casino operators make up Pennsylvania’s fourth largest source of tax revenue. Last year, they paid out $1.3 billion. The tax on slot machines is over 50 percent and an additional tax is paid to the municipalities casinos are located in.
Although casinos are paying the most to property tax cuts at $9 billion, billions more are going to local governments, horse racing, the Pittsburgh airport debt and convention center, volunteer fire departments, police and social programs.
Senate Minority Leader Jay Costa said the state should have simply cut homeowners checks instead of sending the property tax relief to school districts.
“In hindsight, it probably would’ve been best every year to make people come in and pick up their check,” Costa said. We would have a different perception of it.”
One reason Pennsylvania’s casinos are doing so well is the gaming sector no longer has to make the trek to Atlantic City.
“There used to be a number of people in Pennsylvania—tens of thousands—who, when they wanted to go to a casino, would make the drive,” Associate Economics Professor Matthew Rousu said.
Last year, Atlantic City casinos made less than half of what they grossed in 2004 and this year, at least four casinos were expected to close.
Meanwhile, tavern owners in Pennsylvania will now pay $1,500 less for a gaming license, however, those who have applied since January will not recoup their funds. A gaming license for bars was at $2,000 and lawmakers have no way to reimburse those who have already paid.
“We cannot do anything because those funds were put in the general fund of the commonwealth,” Liquor Control Board Chairman Skip Brion said. The board is responsible for granting the licenses.
Taverns and bars are expected to produce more than $150 million per year for the state and lawmakers estimated about 2,000 licenses will be issued. Previously, owners called the process expensive and complicated.
Applicants, however, must still pay $2,000 for a background check and processing. The Gaming Control Board conducts the background checks and the Liquor Control Board handles processing.
Tavern owners were reportedly elated that lawmakers changed the license fee. The small-chance gaming license allows them to offer pull-tabs, drawings and charitable raffles.
“We’re a family-owned business,” Jamie Sue Enscoe, owner of the Beer Garden, said. “We have two (private) clubs within close proximity to us, and people like to gamble.”
“We definitely think that the lowering of the fees is going to encourage a lot more people to get the permit,” Amy Christie said. Christie is the executive director of the state’s tavern association. “It was cost-prohibitive to spend $4,000 to begin the process. We’re small business, we’re mom and pops. We’re not the Sands Casino.”
Tavern owners who hold licenses will pay 60 percent of their gaming revenue to the state and five percent to their local municipality, leaving 35 percent for their establishments. Payouts are capped at $2,000 and no more than $35,000 may be paid out over seven consecutive days.
