Massive borrowing, gambling bills advance in Pennsylvania budget scramble

Under it, Pennsylvania, already the nation’s No. 2 commercial casino state, could see casino-style gambling in truck stops, airports, online portals and 10 brand new casino locations around the state, each with hundreds of slot machines and possibly table games.

It also would make Pennsylvania the first state to allow both casino and lottery games online, in a quest for money from new and younger players. Bars would be frozen out of the package, despite the House’s long insistence that a gambling expansion should favor those businesses, rather than casino operators.

In House debate, House Gaming Oversight Committee Chairman Scott Petri, R-Bucks, warned lawmakers not to pass something that they had not read, and that the bill carried a raft of unintended consequences.

“If you pass this bill, you will see an explosion of gambling in Pennsylvania like you’ve never seen before,” Petri said.

The bill’s license fees and taxes on higher gambling losses is projected to net upward of $200 million a year for Pennsylvania, a state that already netted $1.4 billion in taxes from the industry last year.

However, Pennsylvania-headquartered Penn National said it will consider suing over the gambling package, if it becomes law, because of the “uniquely punitive impact” on the Hollywood Casino it owns in suburban Harrisburg.

Earlier Wednesday, the Senate approved a House plan that revolves around borrowing $1.5 billion — with interest, payback likely would cost more than $2 billion over 20 years — and a grab bag of tax increases that is projected to yield as much as $140 million a year. For months, the Senate and Democratic Gov. Tom Wolf had sought a larger tax package and a lower borrowing limit, but ultimately found unyielding opposition from House Republicans.

Public finance analysts generally regard borrowing to pay operating costs as bad fiscal practice, and a last resort for a state in fiscal distress.

Along with tapping $500 million from off-budget funds, Senate Majority Leader Jake Corman, R-Centre, said gambling, tax and borrowing package should carry the current year’s spending, as well as next year’s.

“This should bring closure to the budget,” Corman said.

Pennsylvania has had spending authority since the fiscal year began July 1 under a nearly $32 billion budget bill that lawmakers overwhelmingly approved. However, it had a gaping, $2.2 billion hole in it, largely from state government’s biggest cash shortfall since the recession, and the ugly fight over how to fill it has pitted Wolf and the Republican-controlled Senate against the Republican-controlled House.

With perhaps a dozen budget-related bills passing the House and Senate this week, Wolf would not give his blessing to the package Wednesday. His office would only say that he would evaluate the bills.

“These bills contain many policy changes and deserve a full vetting,” Wolf’s office said.

In many ways, Wolf had moved on from the budget fight.

Three weeks ago, Wolf began exploring borrowing and cost-cutting avenues without the involvement of lawmakers, declaring he was finished waiting for House Republicans to compromise.

Paying bills on time has required short-term loans from the Treasury Department and more is expected to be necessary, with a $1.2 billion payment due to public schools Thursday.

The state did not emerge unscathed from the budget standoff. It got slapped with another credit downgrade, which will add more than $50 million a year in borrowing costs, according to Wolf’s office.

Amid threats of a mid-year tuition increase for tens of thousands of in-state students, the House released roughly $650 million in aid to Temple, Pitt, Lincoln, the University of Pennsylvania’s veterinary school and Penn State and its agricultural research and extension programs.

With lawmakers itching to depart the Capitol until November, a debate over imposing a tax on Marcellus Shale natural gas production will wait indefinitely, amid opposition by Republican leaders there.