A Tale Of Two Budgets In Pennsylvania: The Best Or Worst Of Times For Online Poker?

December 7, 2015
A Tale Of Two Budgets In Pennsylvania: The Best Or Worst Of Times For Online Poker?

As 2015 draws to a close, and with Pennsylvania’s budget now 160 days past due, the legislature is working overtime as they try to put together a budget that both legislative bodies, as well as Governor Tom Wolf, can agree on.

On Monday, the Pennsylvania State Senate and a House of Representatives committee both passed budget bills. While this seems like great news, there is a hiccup, as the House and Senate versions diverge on several key points, and could have implications for the possibility of online gambling regulation.

According to reports, there was a compromise being worked out over the weekend (which appears to be what the Senate passed on Monday). In the end, the House Republicans walked away from the deal — raising the ire of the Senate and the governor — and they have now come back with a scaled-back budget proposal.

Senate version of the PA budget

The Senate budget has broad bipartisan support (the House Democrats have also indicated they would vote for it) and appears to be the basic framework of a compromise budget the House, the Senate and Governor Tom Wolf were working on over the weekend.

The framework of the bill can be found here.

What is strange about the $30.8 billion is that there are no funding components. The Senate has essentially said, ‘this is what we’re going to authorize for spending,” but it hasn’t said how it plans on paying for the budget, other that “yet to be determined taxes,” overhauling the state monopoly on liquor sales and perhaps pension reform.

The Senate voted on a pension reform package shortly after passing the budget, while liquor privatization was still being finalized for a vote.

House version of the PA budget

We know quite a bit more about the House budget that was passed shortly after the Senate passed their budget.

Based on reports, the House budget has several aspects that the governor will not be happy with. A total of $525 million was cut from a framework the Senate, the House, and the governor, were working on this weekend before House leadership decided to walk away from the proposal, fearful of new taxes and how the education money would be spent.

According to Democratic analysis, the cuts that were made in the House version are:

  • $215 million in cuts to basic education;
  • $25 million in cuts to pre-K programs;
  • $5 million in cuts to Head Start programs;
  • $20 million in cuts for special education.

The House budget would also make structural changes to the funding of human services and cut funding to the state Department of Community and Economic Development.

Unlike the Senate version, there are apparently funding mechanisms in the House version, including nearly $150 million generated by online gaming and online gaming licensing fees, as well as $150 million in new tobacco taxes, which was one of Governor Wolf’s proposals.

Based on current reports, aside from online gambling, the only other gaming reform that made it into the House budget was the addition of slot machines at off-track betting parlors.

The bottom line for online gambling and PA’s budget

In the end, $500 million seems like a lot of cash; but in the grand scheme of things, the two budgets aren’t all that far apart — $30.8 billion for the Senate vs. $30.3 billion for the House.

That being said, the cuts to educational funding seem to be one of the most contentious issues. Governor Wolf ran (and obviously won) on a platform that included increasing the state’s contributions to education in order to stem the systemic increase of local property taxes, something cash-strapped districts increasingly turned to in an effort to try to find money for education.

If education funding is slashed, it’s likely property taxes will continue to rise across the state, and this is something Governor Wolf doesn’t want, and more importantly, can’t afford politically, and could lead to a veto.

The good news for online poker players and advocates for legalized online gambling is the difference is over spending, and not over how the budget will be funded. Whichever budget version is eventually adopted, the state will need to pay for it, and that’s where online gambling (along with many other revenue streams) fits in.

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