Why is legal gambling the only answer?

By Dick Miller

WE.CONNECT.DOTS:  — By the time you read this, Pennsylvania may have a budget.

Or at least that is what the legislative leaders (all Republican) and Democrat Governor Tom Wolf will pronounce from on high in Harrisburg.

Far from perfect is an understatement.

The budget for Pennsylvania government will not balance for fiscal year 2017-18 which began July 1.  That is not unusual for Keystone State government and politics.  The state’s credit rating in the bond market keeps plunging because the budget has not reflected anyone in control in Harrisburg.  Rating drops mean the state is no longer able to borrow at lowest rates possible.

What shenanigans occur for financial experts to judge when a budget is not in balance?

One-time assessments apply to costs that do not go away in following years.  This is known as “kicking the can down the road.”  Both sides desire to apply this irresponsible tactic.

Gov. Wolf, in his original budget proposal back in February, wanted to sell the Farm Show Arena, then lease its use back for 20 years.  If the Arena was to provide financial relief to the state budget, the normal method would be to borrow against its ongoing revenues.

Again, this budget relies heavily on expansion of legalized gambling.  At least the expansion was not as bad as first proposed.  The Republican-controlled House of Representatives wanted 40,000 video terminals in bars and restaurants across the land.

Forget the cannibalization of the existing gambling industry.  Much of the increased sales at new locations would come at the expense of the 18,000 well-paying jobs already permanent in the 12 casinos.

The Senate, also Republican, and the casino industry itself defeated that proposal.

However, legalizing sin continues to top raising sales and personal income taxes or — harder yet — reducing expenses.

Therefore, again as this is written, the state will include some expanded gambling.  Pennsylvania could become the fourth state to legalize internet gambling.

Now an avid gambler will still be able to satisfy his(her) urge at a bar or restaurant, funeral parlor, nursing home, college classroom or wherever WIFI exists.  Also, the state is likely to license 12 new casinos.

Corporations with licenses to operate the existing 12 casinos are expected to be the only ones allowed to operate internet gambling or open a miniature version.

Existing casino operators like that revenue from expansion of gambling falls to them.  Companies running existing casinos originally paid a $50 million license fee to operate in this state.  There will be license fees attached to both internet gambling and miniature locations, however.

Nine of the present casinos reported reduced receipts during the 2016-17 reporting year.  Some believe interest in gambling may have matured.  Millennials, for example, are not spending their money on gambling as did people of the same age in previous generations.

The major gap in the new budget will be covered by other borrowing.  Following a pattern of other states, Pennsylvania is expected to dig into its tobacco rewards payoffs for a borrowing of around $1 billion.

When our state politicians too often look to gambling to keep taxes low, other dangers exist.

Not the least of which is a recurring and increasing social cost.  Ask the casino operators and our politicians. They contend social costs have been minimal with legalized gambling.

The horse racing industry will take the biggest hit in the state’s quest to balance budgets.

“Racinos” became the byword when Pennsylvania first legalized gambling midway in the last decade.  Casinos were required to offer either thoroughbred or harness racing.  Fully built out, the industry was expected to create 10,000 or more jobs in the state.

Support from people more interested in horse racing than gambling may have provided the final big push for casinos.

Part of the gambling proceeds were deposited in a fund to be used as prize money for the horse races.  Enthusiasm for racing waned, however, when a horse owned by an Arabic sheik won the first million-dollar stakes race several years ago.

“Racinos” were the brainchild of Governor Ed Rendell, a Democrat.

When Tom Corbett followed in the governor’s office, he refused to substitute new state funds to match the loss of Obama grants to counter the great Recession.  This resulted in massive cuts in programs.

Corbett began to dip into the horse-racing fund rather than raise taxes.

Gov. Wolf has continued to raid the racing kitty to pay regular state government bills.  This has resulted in a decline in jobs in that industry.

Finally, but not least, the so-called state budget will have income projections adjusted to create a semblance of balance.

For example, casinos will be expected to buy the new gambling licenses early in the next fiscal year.

Bottom Line:  Few politicians do their job in Harrisburg.  A lazy press promotes lack of effort, unreasonableness, and desire only to get re-elected.

Republicans want nothing but lower taxes.  However, they have an associate responsibility.  Either identify programs need elimination or complete existing functions in a cheaper manner.

Conversely, Democrats give top priority to government continuing to serve people in need.  They think rich people should pay for such programs.  When was the last time Democrats proposed to operate good, existing programs in a cheaper manner?

We need more political leaders willing to make matters easier for their constituents.  Some not only fail to meet this objective, they refuse to account for their actions.

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Updated: July 10, 2017 — 1:00 pm
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