Potential loss of casino host fees 'devastating,' Bensalem mayor says
By Crissa Shoemaker DeBree and James Boyle, staff writers
Bucks County Courier Times
Bensalem residents could see cuts to police services if the millions of dollars the township receives from Parx Casino were to evaporate, the township's mayor said Thursday.
That loss of funds could happen, since the state Supreme Court ruled unconstitutional the fees casinos have been required to pay to the communities in which they operate. Unless the state legislature steps in, that will cut off tens of millions of dollars annually for municipalities and counties statewide.
"This is devastating," Mayor Joseph DiGirolamo said. "Absolutely devastating."
The loss of the roughly $10 million Parx contributes annually to the township could mean layoffs of police officers or higher taxes to maintain the department, both measures DiGirolamo said he doesn't support and would be last resorts if a solution couldn't be found.
"I'm hopeful the Legislature will come together with a solution," he said.
The court gave lawmakers four months to find an answer, and state officials were scrambling Thursday to review the decision.
"This impacts an awful lot of communities across the state of Pennsylvania," said state Rep. Gene DiGirolamo, R-18, Bensalem, who is Joseph DiGirolamo's nephew. "The will (of lawmakers) is going to be there. As long as the administration and the House and Senate come together on one plan, I think we can get this done pretty quickly."
State Sen. Tommy Tomlinson, R-6, said he will push for a change before the end of 2016 as Bucks County and Bensalem finalize their budgets.
“The simplest fix would be a $10 million flat fee,” said Tomlinson. “I would have to talk to the other legislators and make sure we are on the same page. Every casino distributes the local share differently; some are in two different counties.”
Tomlinson said that Parx Casino has been a good neighbor in Bensalem and has contributed millions beyond their state and local obligations with its charitable outreach. He took issue, however, with casinos such as Mount Airy, which went to the Supreme Court to end the local share assessment.
“They knew when they first applied for the licenses what they would be expected to pay,” said Tomlinson. “All of a sudden they are trying to get out of those payments. To say I’m a little upset is putting it mildly.”
Parx representatives declined to comment Thursday.
Former State Rep. Paul Clymer supported Tomlinson’s $10 million flat-fee solution and expressed sympathy with Bensalem residents and business owners who could potentially see tax hikes as a result of the court’s ruling.
“(Mayor) DiGirolamo cannot reduce the police force,” said Clymer. “Parx is a class 1 casino and needs law enforcement officers available for appropriate, 24-hour security.”
A vocal opponent to the state's gaming law before and after its passage in 2004, Clymer said taking away that revenue now would unfairly affect people living in Bensalem who did not have anything to do with creating the casino.
“Parx paid $50 million for its license and now brings in $450 to $500 million a year,” said Clymer. “It’s a cash cow making a lot of money. If the state can’t figure something out, Bensalem should be able to sit down with the people at Parx and come up with an agreement.”
The gaming law required most Pennsylvania casinos to pay 2 percent of their gross slot machine revenue to their host counties and the greater of 2 percent, or $10 million, to their home municipalities. Mount Airy Casino said that the $10 million minimum municipal host fee meant that lower-performing casinos were paying a higher tax rate. The casino argued — and the court agreed — that that violated the state's constitution, which requires uniformity in tax rates.
The ruling doesn't affect SugarHouse Casino, which pays a 4 percent local tax rate to Philadelphia. Also exempt are Valley Forge Casino Resort in Upper Merion, Montgomery County, and Lady Luck Casino Nemacolin in Wharton, Fayette County, which don't have the same requirements because both have "resort" casino licenses that restrict the number of slot machines they have and the people allowed to play them.
In the most recent fiscal year, which ended in June, Bensalem received $10,045,157 and Bucks County received $7,609,965, from Parx's slot machine revenue, which totaled more than $388 million. They also received about $1.5 million each as a share of table games revenues, which are not at issue under the court decision and will continue to be paid.
Over the past five years, the county and township together have received nearly $90 million in slot machine revenue from Parx, the state's highest-grossing casino.
Bucks County Commissioners Chairman Robert Loughery said the county splits its allocation with the Bucks County Redevelopment Authority, and uses its share in the general fund.
“Every penny counts, no doubt, but we have a $400 million budget and we are in a good financial position that we will get by without that money,” said Loughery. “I’m more concerned about the loss of money going to the redevelopment authority. They have funded important grants for public safety and health initiatives."
At their most recent meeting, for example, the commissioners unanimously voted to approve three applications to the Bucks County Redevelopment Authority for nearly $1 million in grant money funded by the casino allocations. The applications include $221,000 for the countywide law enforcement DNA collection program, $700,000 to support operations at the Lower Bucks Public Safety training center and $125,000 for the Bucks County Health Improvement Project's adult clinic in Bensalem.
“That money is already there from last year’s revenues,” said Robert White, executive director of the Bucks County Redevelopment Authority. “That’s not going anywhere. It’s next year’s money that we are concerned about.”
According to White, the BCRDA has dispersed more than $25 million to local projects in the eight years it has received a portion of the county casino money. Those projects have included the new Middletown firehouse and rescue squad building, LED lights in several communities and contributions to the county’s new emergency dispatch radio system.
“That money went to help a lot of people and saved communities a lot of taxpayer money,” said White.
Joseph DiGirolamo said Parx has been a valued member of the Bensalem community.
"We have a great relationship," he said. "They do a lot in the community. They do a lot around Bucks County."
Bensalem had used the money from Parx to provide property tax relief to residents, although the amount returned to homeowners has shrunk over the years as the township sought to fill gaps in its roughly $60 million annual budget. Bensalem also enacted a 1-percent earned income tax for this year.
The mayor said he hoped Parx might step up with voluntary contributions if lawmakers fail to act quickly on a remedy.
"I'd certainly ask them," he said. "But this is a serious, serious problem for us right now. This is the biggest blow that we've ever had on taxes."
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