Analysis: Casino tax relief falls short of expectations
Ten years after Pennsylvania legislators legalized casinos, the “historic” property tax cuts promised by gambling's supporters have not materialized for most homeowners, a Tribune-Review analysis of state data found.
In almost all of the state's 501 school districts, the average homeowner pays more today than he or she did in the 2003-04 school year, just before lawmakers legalized casinos, the Trib's analysis of property tax rates and gambling-funded rebates showed.
“If there was relief, buddy, I didn't see it,” said Scott Wilson, 46, a grocery store butcher who lives in Hopewell in Beaver County.
Lawmakers promised homeowners an average of $300 a year in property tax relief when they passed the law legalizing 14 casinos statewide on July 4, 2004. The average turned out to be about $180, according to state Department of Education data.
At the same time, property taxes for an average Pennsylvania home increased more than $1,000, according to a Trib analysis that incorporated data from the census, the state Tax Equalization Board and the departments of Education and Revenue. Taxes on the average Pennsylvania home — worth about $104,000 in 2003 and $164,900 in 2013, records show — declined in 15 school districts since the casino law took effect.
Part of the reason lawmakers' estimates were so far off was that they initially wrote the law to boost horse racing in Pennsylvania, not to lower taxes, Gov. Tom Corbett said in a recent interview.
“It was never about property tax” relief, Corbett said. “It started out with the horsemen, to save the racing industry. ... But in order to get votes, then they had to go, ‘Well, we need some stand-alones.' ”
Those stand-alone casinos to which Corbett referred, including Rivers Casino in Pittsburgh, pushed the total number of allowed facilities to 14.
One of the law's chief supporters, Sen. Tommy Tomlinson, R-Bucks County, predicted the state would hit $1 billion a year in property tax relief by 2010. It reached $778 million in 2013, according to the Department of Revenue. Tomlinson did not return calls seeking further comment.
Two casinos — one designated for Philadelphia and another at a racetrack, possibly in Lawrence County — remain unbuilt.
Billions in tax dollars
Although the optimism of 2004 overshadows the reality of 2014, casino taxes quickly became one of the state's largest revenue sources. The $1.3 billion casino operators paid last year makes gambling money the fourth-largest source of tax revenue collected.
More than half of the billions of dollars that gamblers lose every year goes to the Department of Revenue. For slot machines, casinos pay an effective tax rate of more than 56 percent. The slots tax was supposed to be closer to 54 percent, including a share for host municipalities that is 2 percent or $10 million (whichever is larger). Because no casino makes close to $500 million, they pay the higher $10 million flat rate.
Property tax cuts make up the largest single piece of the $9 billion casinos have paid in taxes, but billions more flow to county and municipal governments, subsidize horse racing, pay down Pittsburgh International Airport's debt, and cover the operating deficit at the David L. Lawrence Convention Center, Downtown, among other projects. Tens of millions of dollars goes to volunteer fire and EMS departments, police agencies, and drug and alcohol programs.
But the biggest effect legal gambling has on Guy Mahaffey's life is the manicured riverwalk between Rivers Casino and the Ohio River where he gets some exercise.
Mahaffey, 68, of Pittsburgh's Manchester neighborhood returned here in 2009 after living in Washington for about 20 years. He noticed the transformation of the Strip District and Lawrenceville, but Rivers Casino seems to fade into the scenery.
“I can't say that I think that it has made a big difference, in terms of making the city either more livable or less livable,” said Mahaffey, who lives five blocks from the building.
Lawmakers might have missed an opportunity in 2004 when they decided to send the tax relief money to school districts, rather than cut checks directly to homeowners, Senate Minority Leader Jay Costa said. Someone with a mortgage, whose property tax bill is paid by a bank, might not notice the line on their bill noting how much more they would pay without casinos, he said.
“In hindsight, it probably would've been best every year to make people come in and pick up their check,” said Costa, D-Forest Hills. “... We would have a different perception of it.”
Winners and losers
To see just how well the industry has done in Pennsylvania, a person need only look to the East.
“One way you could gauge the success, unfortunately for our neighbors, is just how devastated Atlantic City has been,” said Matthew Rousu, associate professor of economics at Susquehanna University. “There used to be a number of people in Pennsylvania — tens of thousands — who, when they wanted to go to a casino, would make the drive.”
The New Jersey gambling hub tapped the Philadelphia market, in particular, for patrons, said Robert Shore, an industry analyst at Union Gaming Group in Las Vegas.
Atlantic City casinos grossed $9.3 billion in 2004, according to the New Jersey Casino Control Commission. In 2013, the casinos grossed less than $4.1 billion. Four casinos closed or announced plans to close this year.
Maryland and Ohio legalized casinos in 2008 and 2009, respectively. New York voters legalized casinos in 2013. With casinos in Delaware, New Jersey and West Virginia, Pennsylvania casinos soon will face competition on every border.
“Properties that offer, essentially, slot machines — they're like grocery stores,” Shore said. “You just go to the one that's closest.”
Mike Wereschagin is a Trib Total Media staff writer. Reach him at 412-320-7900 or email@example.com. Staff writer Jeremy Boren contributed to this report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- North Shore access to be limited Saturday for Chesney concert, officials say
- Pittsburgh Mayor Peduto returning from manufacturing trade mission to Cuba
- Duquesne University to raise minimum wage floor
- Plum schools, dealing with sex scandal, to form panel in June
- Penn Hills votes to sell, lease vacant school space
- Land eyed for trail connectors to expand Harrison Hills Park
- Air rifle incidents on the rise, experts say
- Lawsuit filed against PWSA for inaccurate billing from radio-controlled meter readers
- Allegheny County Council begins process to replace Barbara Daly Danko
- Aging natural gas pipelines in Green Tree to be replaced
- Newsmaker: Joelle L. Smith