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Official: Gaming Board Proposals Good for Taxpayers

A proposed bill in the Pennsylvania legislature would direct table games taxes to the state's property tax fund.

Taxpayers in Pennsylvania will have a better glimpse into the workings of the state Gaming Control Board--and could see a little more money to help offset property taxes--under a pair of bills the state House is aiming to pass this week.

The reforms on this week’s calendar include requiring the Pennsylvania Gaming Control Board, or GCB, to:

  • Post all right-to-know requests and responses on its website.
  • Inform gamblers how much they have won or lost on a monthly basis.
  • Close the so-called “revolving door” in which the gaming industry hires members of the board that is supposed to regulate it, which is intended to prevent conflict of interest.

The reforms are supposed to make the board's operations more transparent and visible to the taxpayers, who have a stake in the operation of the state's casinos.

“These bills deal a good hand to Pennsylvania citizens,” said Terry Mutchler, executive director of the state Open Records Office, which enforces the state’s right-to-know law on behalf of residents.

The bills are part of the legislative response to a grand jury report released in May that was critical of the GCB, which oversees the operation of the state’s casinos.

The 102-page grand jury report was the result of a two-year investigation into the board’s actions since it was formed in 2005, when gambling was legalized in the state.

The report found that the GCB’s administration and regulatory process:

  • “Neglected or wholly ignored” its responsibility to protect the taxpayers’ interest in the state’s gambling operations, since taxpayers are receiving a portion of the state's profits from the industry.
  • Was more focused on getting the industry up and running than overseeing it, and failed to properly vet potential license-holders.

No criminal charges were filed after the grand jury's investigation, which GCB Chairman Gregory Fajt said at the time was proof that no criminal activity was occurring at the agency.

Doug Harbach, GCB spokesman, on Thursday said the grand jury report uncovered “some valid concerns” about the board’s operations.

“In its infancy, this agency had areas to improve upon, and that included transparency,” said Harbach. “But we have worked hard to become as transparent, or more so, than any other agency in state government.”

He said the board began voluntarily posting all right-to-know requests and responses to its website earlier this year, but it also holds all meetings in public with agendas posted online ahead of time, and will soon be making live video of all meetings available to the public over the Internet.

Doug Thomas, executive director for state Rep. Rosita Youngblood, D-Philadelphia, the minority chairwoman of the House Gaming Oversight Committee, called the proposals “good, common sense reforms” that Democrats support.

“When it comes to the right-to-knows, they are already doing it as policy, but it makes sense to make it a law so there is continuity over time,” Thomas said.

House Bill 2012, sponsored by state Rep. Gary Day, R-Berks, would prevent any executive member of the GCB from being employed by the industry within two years of leaving the board, closing the so-called “revolving door.”

A state law passed last year banned the GCB from employing any executive from the gaming industry within two years of leaving the old position, while the new bill would shut the "revolving door" in the opposite direction.

House Bill 2009, sponsored by state Rep. John Lawrence, R-Chester, would require the posting of all right-to-know requests and would require the GCB to send monthly statements detailing wins and losses to any patrons who sign up for reward cards with casinos.

“The goal is simply to show people what they have won and what they have lost,” said Lawrence. “Its underlying intent is to give people some warning signs they might have a problem.”

Another component of House Bill 2009 will redirect about $77 million of state revenue from gambling toward property tax relief instead of the state’s general fund, according to a House fiscal note.

Under current law, 55 percent of casino revenue from slot machines is directed to the state through taxes, with 34 percent of the state’s share funding the property tax relief fund, to a tune of $2.7 billion last year.

The state also takes a 16 percent cut of casinos' revenue from table games, but those funds go entirely to the general fund and local governments in areas with casinos.

Lawrence said he does not support the legalization of gambling at all, but now that the “genie is out of the bottle,” the state’s profits from casinos should help the state’s taxpayers, not fund government programs.

If the bill becomes law, the state’s general fund will lose out on about $77 million annually beginning next year, as those funds would be directed to the property tax relief fund. That fund pays for property tax rebates of up to $975 for elderly and disabled homeowners in Pennsylvania.

To qualify, a homeowner must make less than $35,000 annually and a renter must make less than $15,000 annually.

During the 2010-11 fiscal year, taxes on slot machines generated more than $2.7 billion for property tax relief in the state, which would be augmented with Lawrence’s proposal.

During the 2010-11 fiscal year, taxes on table games netted more than $71 million for the state, and revenue has been higher during the first five months of this fiscal year, leading to higher projections for the annual total.

State Rep. Curt Schroder, R-Chester, chairman of the House Gaming Oversight Committee, said Monday the bills were part of the step-by-step implementation of the recommendations of the grand jury report. He said he favored the plan of putting more revenue into the property tax fund.

“We all support getting as much relief as possible for property taxes in Pennsylvania,” Schroder said. “More funding will not solve the property tax issue, but every little bit helps.”

It was expected that the bills could be passed as early as Tuesday afternoon.

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