HARRISBURG House leaders work on slots compromise

The slot machines are the only alternative to raising taxes, a Dem leader says.
HARRISBURG (AP) -- Democratic and Republican leaders in the state House of Representatives are trying work out the fine points of a compromise plan to legalize slot-machine gambling to generate more than $1 billion in property-tax relief for local school districts.
Remaining issues include the number of prospective gambling venues and the specifics of how gambling revenue would be funneled to districts where voters approve local income tax increases in a November referendum, said Mike Manzo, chief of staff to Democratic Leader H. William DeWeese.
Nothing will become final until after both caucuses have a chance to review and discuss the plan, which could occur as early as today, Manzo said Monday.
Democrats are pushing for a plan that would authorize slot-machine parlors in up to 15 venues -- as many as 11 racetracks and four other locations, Manzo said.
House Speaker John M. Perzel and Gov. Ed Rendell, however, said their staffs are focusing on a plan for slot machines at 11 locations -- nine racetrack licenses and two nontrack licenses for venues in Philadelphia and Pittsburgh.
Senate measure
The 50-member Senate has passed a measure that would allow slot machines at as many as eight racetracks, with all 21 Democrats and six Republicans in favor.
House lawmakers are trying to draft an expanded gambling bill to avoid the 34 percent income tax increase that Rendell proposed to fund property-tax relief and other initiatives.
"If you're going to do property-tax cuts at any meaningful level at all, and you're not going to raise taxes, the only other option here is gaming. We've been making that point since January," Manzo said.
The proposed property-tax compromise would require school districts to have November referendums asking voters to approve a moderate increase in local income taxes.
Districts that approve the tax increase would then receive that amount plus an average of five times as much in gambling revenue to put toward public schools, effectively lowering the property taxes that typically finance local education.
Also under consideration is a vast menu of other revenue-raising methods including a tax on wireless telephone use, a sales tax on clothing items worth $100 or more, and a sales tax on liquor by the drink to replace the 18 percent "Johnstown Flood" tax on bottles, and a proposal to increase the state income tax from 2.8 percent to "anywhere between 2.95 percent and 3.1 percent" instead of the 3.75 percent proposed by Rendell, Manzo said.
House leaders are also trying to find ways to pay for at least scaled-down versions of Rendell's education initiatives, which are centered on expanding early-childhood education programs, and proposals to spur business development.