Among other tentative provisions in the amendment, which never came to a vote in the state Senate, the Pennsylvania Gaming Control Board could have gotten more money for operating costs while the board struggles to get the first casinos running, local legislators said.


A $50 million figure was the topic of discussion during July 1 debate on the Senate floor over the state budget.


Gary Tuma, a spokesman for state Sen. Vince Fumo, D-Philadelphia, who was trying to get the Senate Republican majority to vote on the amendment to the 2004 slots bill, said reports that the bill included a $50 million transfer from the state Motor License Fund to the Gaming Control Board aren’t accurate.


He added, though, that “there may have been something contemplated” in the legislation to address operating costs for the gaming board.


The Senate debate has triggered questions on the financial condition of the gaming board. Slots opponents say the original $7.5 million loan to the board for startup costs in the slots law, Act 71, has already been spent.


They contend, and Sen. Gib E. Armstrong said he’s been told the same thing, that other state agencies have been tapped for “loans” to the board.


A senior budget official in Gov. Ed Rendell’s administration denied that and said funds for the board have been drawn from the overall $36.1 million startup appropriation in Act 71, not just from the $7.5 million specified for the gaming board.


“I think we’ll be able to manage this,” said Mary Soderberg, executive deputy secretary of the budget and chief financial officer of the commonwealth.


The gaming board’s spokesman, Nick Hays, said Friday that he doesn’t have any information available on the board’s finances.


“We are aware of the issues,” he said. “We have been advised they are going to be worked out shortly.”


Armstrong, R-13th District, said beating back the amendment was a victory for anti-gambling forces.


“I don’t know if they [the gaming board] can proceed without this amendment,” he said. “This could slow things down ’til October.”


Bigger pot?




Act 71, the 2004 law authorizing up to 61,000 slot machines in 14 casinos across the state, appropriated $7.5 million over two years for the new gaming board to develop procedures, license slots applicants and decide where casinos should be located.


Slots opponents, including Dianne Berlin, the Penryn woman who coordinates CasinoFreePA, claim the $7.5 million ran out some time ago.


Hays said Friday that he did not have information available on how much the board has spent and how much is available.


He said the gaming board is focusing on screening license applicants and determining which proposals are best, “so we can get casinos licensed to begin to get some of the benefits that were intended by the law,” including property tax relief and economic development.


Soderberg said the agency has been able to draw from the entire pot of money authorized in Act 71 for slots startup costs. The legislation also called for $21.1 million for the Revenue Department and another $7.5 million for the state police.


The gaming board hopes to have the first slots licenses issued by the end of 2006, at which point, Soderberg noted, “the revenue will start flowing.”


Until then, “We’re drawing on the entire $36.1 million,” she said. “... There are sufficient funds for this year.”


Sen. Armstrong said he’d never been told that the gaming board was using the entire $36.1 million.


The board, which has been dogged by controversy not only over gambling but over the behavior of some of its employees (see related story, above), doesn’t have a source of revenue until casinos begin operation.


That goal has been delayed by a series of disputes, including a failed lawsuit by anti-gambling groups and most recently by squabbles on the issue of licensing slots suppliers as middlemen between manufacturers of slots equipment and casino operators.


Before the Legislature finished the 2006-07 budget last weekend and went home for the summer, Sen. Fumo was promoting an amendment that would have reinstated the 2004 slots law’s “pre-emption” of local zoning rules for casinos in Philadelphia, among other changes to Act 71.


The original pre-emption provision, applied statewide in Act 71, was struck down by the state Supreme Court.


Fumo’s spokesman, Tuma, said that during debate, Sen. J. Barry Stout, D-Washington County, asked whether the budget included a reported $50 million transfer from the Motor License Fund to the Gaming Control Board.


When Fumo said the budget didn’t include that, Stout then asked whether the $50 million was in the slots amendment; Fumo again said no, according to Tuma.


The problem, Tuma said, is that the amendment was never finalized to the point that it could have won on the floor, so pinning down what was in the bill isn’t possible.


Sen. Armstrong, however, said the $50 million transfer was to be part of the amendment, which published reports have said was 150 pages long. Proponents wanted the Republican majority to vote on a bill they had barely seen, Armstrong said.


“It’s more than a tweak,” he said, laughing. “It’s probably a grab.”


Fumo, the influential leader of the Senate Democrats, even held up passage of the budget late July 1 by convincing Democrats to vote against it, in an attempt to get action on the slots amendment, but to no avail.


The budget passed with Democratic support in the early-morning hours of July 2. The slots amendment was deferred until the General Assembly returns in September.


Armstrong called the blocking of Fumo’s amendment “one of the biggest victories I think we’ve had.”


“It showed the gambling [supporters] they aren’t in control anymore.”


Running dry?




The questions about what the slots amendment might have contained, though, have given rise to other questions about the financial situation of the Gaming Control Board.


Hays, the board’s spokesman, said Friday that he does not think it’s accurate to say the board is low on money or that it has gotten a loan from another agency — which slots opponents and Sen. Armstrong have identified as the Pennsylvania Lottery.


But the GettysBlog Web log, focused on the proposed casino in Gettysburg, posted recently: “[M]illions of dollars are shunted from various departments to the Gambling Control Board for operating expenses in a bureaucracy that will not generate any income for the first four years of its existence, and then will not recover its startup costs and begin to show any profit for at least four years after that!”


The gaming board’s work is supposed to be funded by casino taxes and license fees; each slots licensee must pay $50 million for the privilege, a provision that Armstrong pushed in 2004 during his ultimately unsuccessful campaign to beat back slots.


Act 71 also includes lesser fees for licenses to supply slots equipment.


But the fees don’t have to be paid until licenses are issued; so far, no casino licenses have been approved.


“There is a concerted push to get a casino up and running sometime this year,” said Rep. Gordon Denlinger, R-99th District, another slots opponent.


The $7.5 million in Act 71 for the gaming board is considered a loan from the general fund. That $7.5 million was for the period from July 1, 2004, to June 30, 2006.


Soderberg, the deputy budget secretary, said a bill approved in last weekend’s pre-vacation wrapup included an extension of time for the original appropriation.


“I did not see it, and it was not mentioned in caucus at all,” Armstrong said of the extension. “That’s not to say it didn’t happen.”


“They are living on borrowed money,” Berlin charged, referring to the gaming board.


“This is probably the biggest scam that they’ve pulled.”

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