HARRISBURG House lawmakers work to expand racetrack slots

Lawmakers want to use gambling money to avoid a hefty income tax.
HARRISBURG (AP) -- To help finance a proposed $1 billion-plus property-tax relief plan, House lawmakers are focusing on a plan to authorize slot-machine parlors at up to 11 racetracks, three more than Gov. Ed Rendell originally sought and the Senate approved in a bill last month.
House Democrats and Republicans say the process could be accomplished without creating new racing licenses and believe it could raise $1 billion this year. But the proposal faces an uncertain future in the Senate, where the original bill passed with all 21 Democrats and six Republicans in favor and the other 22 Republicans opposed.
"I don't know that I have the votes to expand [the number of racetracks included] to 11," Sen. Robert M. Tomlinson, the Bucks County Republican who wrote the original slot-machines legislation, said Thursday. "I'm OK with that, but I'm not sure if the other Republicans are."
Not in favor
Sen. Jane Earll, an Erie Republican who supported Tomlinson's slots bill, said she is not inclined to support any additional tracks.
"If [the tracks] are in overlapping market areas, then I anticipate that the revenue at each location would go down," Earll said.
In large part, the House lawmakers are trying to raise more money from gambling to avoid the 34-percent income tax increase that Rendell proposed to help pay for new education programs, property tax relief and a hole in the budget.
In a property-tax compromise budding between Rendell and the Republican-dominated Legislature, school districts would be required to hold referendums in November asking voters whether to approve a modest local income-tax increase.
Districts that approve the tax increase would then receive that amount plus an average five times that much in gambling revenue to put toward public schools, effectively lowering the property taxes that typically finance local education costs. The multiple of the gambling money that would be assigned to each district would be based on its relative wealth.
Under one plan, the state would contribute $1 billion to property tax relief and the local share would be $270 million, Rendell said Thursday.
"This is a very good compromise because it's mostly top-down relief," Rendell said, referring to the state's disproportionately large share of the payments.
Last month, a Republican-sponsored bill on property taxes passed the Senate but drew a veto threat from Rendell because it did not address a way to supply more property-tax relief to poorer districts.
That bill would require voters in each school district to decide whether to swap a higher local earned-income tax in exchange for a lower property tax.
Drawing up options
On Thursday, House Democratic aides were drawing up options that could produce $1 billion -- to come from licensing fees and a tax on the revenue from the slot machines -- before presenting it to Republicans by Friday morning to begin negotiations, aides said.
Talks on property taxes and gambling were one set of many that progressed Thursday as House lawmakers and aides worked feverishly to hammer out compromises on the Democratic governor's proposals.
Besides lowering property taxes, those proposals also include expanding early childhood education and rolling out cash to stimulate business development.
The goal remains to bring the proposals to the House floor next week, three weeks into the Legislature's traditional two-month summer vacation.
House leaders also were considering a variety of ways to pay for at least scaled-down versions Rendell's education initiatives and to plug remaining gaps in the budget.