The Pennsylvania Supreme Court made a dramatic ruling this week that will affect the way local casinos make payments to their host communities, as has been required up until now by state law. On Wednesday, the court struck down the requirement that casinos need to fork out the approximately 4% tax that they have been paying to local municipalities for over ten years. The Supreme Court ruled that this payment was “unconstitutional” as it was not a uniform payment and thus affected the 12 Pennsylvania casinos differently.
In his opinion statement, Justice David Wecht wrote that he was aware that that many counties and municipalities would be negatively affected by the sudden loss of tens of millions of dollars, and he was thus delaying the implementation of the ruling for four months. In this time, it is hoped that lawmakers will be able to amend the legislation.
“We are mindful that our decision may significantly affect many counties and municipalities that have ordered their affairs in reliance [on the tax revenue],” wrote Wecht.
Mount Airy Casino in Pocono Mountains asked the Supreme Court to rule over the host fee which it felt was an unfair burden on lower performing casinos in the state. State law dictates that casinos need to pay a minimum 4% of gross slot machine gambling revenues to their host communities. Half is paid to state counties and the other 2% or $10 million (whichever is greater), is paid to municipalities.
The Supreme Court ruling has left local municipalities reeling with shock as they scramble to work out what the loss of this important revenue would do to their budgets. Last year, nearly $150 million made its way to municipalities and counties budgets, and it stands to reason that many good causes will be affected if the money suddenly dries up.
Douglas Hill, who serves as executive director of the County Commissioners Association of Pennsylvania, reiterated the importance of the money for local governments. “Very clearly, the gaming revenue has gone to legitimate and worthwhile local purposes, all aimed at improving the community, and equally for the host municipalities,” he said in an interview this week.
Also commenting was Senate Appropriations Committee Chairman Patrick Browne who said that action would be taken and it would done in such a way to maintain the obligation of the casinos to local communities. He said that the Supreme Court ruling as it stands right now would “absolutely devastate these communities.”
