Pa. budget gambles with our future

Just about four months late, the 2017-18, $32 billion Pennsylvania budget is in place. After considerable wrangling and horse-trading, the Republican-controlled General Assembly held its collective nose and passed a document that at its core expands casino gambling, borrows a ton of money and taxes Internet sales.

Backed into a corner with few cards to play, Gov. Tom Wolf finally signed off — or more aptly — threw in the towel. “I’m sick and tired of special-interest politicians, self-interest, political games trumping the public interest here in Harrisburg,” Wolf said in a speech earlier this week.

Wolf wanted to borrow $1.25 billion and repay it with proceeds from the state Liquor Control Board, but the Legislature’s budget chose instead to borrow $1.5 billion against what we will get in the next 20 years from the state’s settlement with big tobacco companies.

Don’t think this is free money. We taxpayers will have to pay an estimated $2 billion in interest and fees over the 20-year borrowing period. That works out to a cost of $156.50 for every man, woman and child in the state.

Because of officials’ inability to put a reliable budget into place, rating agencies have downgraded the state’s creditworthiness — again. There was no stomach to raise broad-based taxes, especially since all 203 members of the state House of Representatives and 25 of the 50 state senators are running for re-election next year.

Although there was talk of a possible Marcellus Shale extraction tax, in the end, the Republican leadership found gimmicky ways around it.

The other pillar of this budget bill is a significant expansion of gambling, including the initiation of online gaming. While Pennsylvania ranks second in overall gaming revenue — Nevada is tops — it pulls in the most tax dollars — $1.4 billion. Add in the state lottery, that’s another $1 billion profit on $4 billion of sales.

Under the new legislation, casinos will be able to offer interactive gambling parlors at eight international airports, including Lehigh Valley International Airport in Hanover Township, Lehigh County, and Wilkes-Barre/Scranton International Airport in Avoca, spanning the borders between Luzerne and Lackawanna counties. Pennsylvania will join Nevada and Puerto Rico as the only places on U.S. territory where airport gambling is permitted. Other locations will get into the act, too, such as selected truck stops.

On top of that, most of the state’s dozen casinos will be able to bid on licenses for new, satellite casinos with hundreds of slot machines. The price tag for a license starts at $7.5 million. To get a table games certificate would cost an additional $2.5 million. This part of the legislation would limit these casinos to 750 slot machines and 30 table games. By comparison, the state’s bigger casinos, such as the Sands in Bethlehem, can operate up to 5,000 slot machines.

This major expansion is not going over well with existing casino owners, some of whom are contemplating filing a legal challenge to the legislation. If this happens, look for lengthy — and expensive — court battles. Some legislators who opposed the expansion warned that this could kill or at least cripple the goose that laid the golden egg.

What you didn’t hear about in the casino expansion information is that when there is more gambling, there is more addiction. According to the well-respected Mayo Clinic, about 2 percent of the U.S. population suffers from gambling addiction. That works out to nearly 6.5 million men, women and teens.

The National Council on Problem Gambling says that a male gambling addict accumulates an average debt of between $55,000 and $90,000, and a female averages $15,000.

Most cannot afford to pay back what they owe. As a result, gambling addicts develop a high tendency to amass even more debt, suffer from other health issues, lose their jobs, strain their relationships and commit crimes to feed their habit. This costs society, too — about $6 billion annually.

As a practical matter when it comes to projecting budget revenues, our legislators have been ever more optimistic. They are hoping gambling expansion will bring in an additional $200 million.

It is obvious that our lawmakers have not learned their lessons when estimating revenues from sources that are not a sure bet. In recent years, their revenue gambles have been way off the mark, which is one of the reasons they were confronted with a $2.3 billion revenue gap this year.

The legislative leadership disagrees, saying that this budget will put the state on a sound fiscal path for the next few years. To which we say: Don’t count on it.

By Bruce Frassinelli | tneditor@tnonline.com