Legislative wrangling could cost communities millions

It seems to us that the Mount Airy Casino case challenging payments to communities hosting casinos is a study in sour grapes.

On top of that, municipalities certainly should have had an expectation that everything was in order when the casino-approval law was put into place in 1994 and that it could pass constitutional muster. Obviously, this was not the case.

The Pennsylvania Supreme Court late last month upheld the Monroe County casino's allegation that the Local Share Account is not applied uniformly among the state's 12 casinos, a requirement of the state constitution.

Mount Airy and the others knew about the provision when they applied for licenses. Now, after communities are reliant on these substantial amounts of funds to pay for any number of local projects, some of the casinos want to pull the rug out from under these municipalities.

The Supreme Court has given state legislators 120 days to pass corrective legislation. For all intents and purposes, however, getting new legislation on the books that satisfies all aggrieved parties is going to be a tall order. You see, the current legislative session ended this week, and Republicans who control the General Assembly could not agree on a fix.

As is too often the case with our legislators in Harrisburg, critical bill-passing comes down to a frantic flurry to get things done at the eleventh hour, which is why we sometimes get poorly crafted legislation.

The state Senate approved what State Sen. Pat Browne, R-Lehigh, called a temporary stopgap until a permanent solution is worked out between now and next May, but the state House balked. Some House members saw this as an opportunity to get communities in their districts in on the gravy train even though their communities are not directly affected by casino operations.

On top of that, Thomas Leonard, the attorney for Mount Airy casino, said the proposed temporary fix was just as unconstitutional as the legislation that was overturned by the state Supreme Court, and he threatened to go back to court if it is passed.

Municipalities are constructing their 2017 budgets and are faced with several options none of which is particularly appealing. They can either plan a tax increase to make up for the potentially lost revenue, cut back on expenses and staff or take out loans with the hope that the legislators come up with a workable plan early in 2017.

In Bethlehem, for example, the $8.8 million local share paid by the Sands Casino accounts for about 12 percent of the city's annual budget. The Local Share Account makes up 40 percent of the annual budget of Paradise Township, where Mount Airy is located in Monroe County. In Carbon County, there are a number of projects that cash-strapped communities are seeking through this local-host program. Many of these were detailed in an earlier news story in the Times News. One of the biggest applications comes from Lansford for $950,000 to fix its community swimming pool, which has been out of service until repairs are made.

All counties and municipalities in and contiguous to where casinos are located are eligible to apply for these funds, including Northampton, Monroe, Carbon and Lehigh in our area.

When the law was first written, it provided that casinos had to pay at least 4 percent of gross slot machine revenues to host communities. The breakdown was 2 percent to counties and 2 percent or $10 million, whichever is greater, to municipalities within these counties.

In its ruling, the state Supreme Court did not object to the fees but to the inequality issue. Mount Airy contends that since its proceeds are lower than many of the casinos in larger areas, such as the Sands and those in and around Philadelphia and Pittsburgh, it is being assessed a disproportionate percentage by comparison. This, its attorneys say, is unconstitutional.

The high state court said the fees collected and distributed so far will not have to be returned, but Leonard said Mount Airy is considering pursuing the issue to get back some of the money through a federal court suit. We find this to be mean-spirited and the antithesis of being a good neighbor.

As to why the inequality issue was not addressed when legislators were drafting the law, an insider familiar with the operations of the state Gaming Commission, who asked not to be identified since he is not authorized to speak on behalf of the board, said the assumption was made that since a casino had to apply for a license, it was aware of the rules of engagement in advance. If it went forward with the process, the casino was tacitly agreeing to the rules of the game, the person said.

While Mount Airy was willing to do this originally, the big pot of money at stake apparently was too tempting to be ignored. Leonard said that casino operators wanted to wait to see how the gaming market in Pennsylvania matured before they made a judgment on how the fee provisions would work out.

The high court could have made the ruling effective immediately, but since it understands the importance of these funds to the communities which benefit from them, it delayed implementation for 120 days to give legislators a chance to introduce and pass corrective legislation.

Sen. Robert "Tommy" Tomlinson, R-Bucks, one of the sponsors and drafters of the original legislation, said legislators could choose either a flat fee or a flat percentage. Either meets the test for uniformity, he said.

We also urge legislators not to try to tie this corrective legislation to the controversial gambling-expansion bill, but that is what some legislators tried to do this week. This only muddies the waters and could torpedo getting the Local Share Account back on track.

While the legislature figures out the fix, the state Department of Revenue will continue to collect the local share tax until the late-January deadline.

The most important thing is to protect our local communities, which have become reliant on this money. These funds were promised as a trade-off against the problems casinos create - increased traffic, prostitution, crime and other law-enforcement issues and gambling addiction.

By Bruce Frassinelli | tneditor@tnonline.com