New Castle News

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December 31, 2012

Mitchel Olszak: State bets on gambling to raise funds

NEW CASTLE — Gov. Tom Corbett likes to point out he has kept his promise of no new taxes in the commonwealth.

Of course to accept this, you have to ignore property tax hikes imposed by many of Pennsylvania’s school districts in the last couple of years. These aren’t necessarily Corbett’s fault (districts were trying to offset restrictions in state funding after the heady Rendell years). But for the average taxpayer, it’s the cost, not who’s imposing the levy.

And then there’s the charge imposed on shale gas drilling. Not only did Corbett avoid the tax label by having it called an impact fee, but the state also came up with a convoluted scheme that has counties, not the state, decide if the funds will be collected from drillers.

Yet despite his stance on taxes, Corbett appears to be determined to impose what amounts to a new burden on Pennsylvanians to pay for entitlements. It comes courtesy of a massive planned expansion in gambling.

The Corbett administration has been engaged in negotiations with a British firm, Camelot Global Services, to consider privatizing the state lottery system. Under discussion (with a tentative deadline scheduled for this week) is a deal that would give the company control of the lottery for 20 years.

That’s an astonishing length of time for a state government pact. But Corbett and his staff defend it by saying Camelot is guaranteeing $34 billion in profits for the state during that time.

I’m not sure how big of a deal that is, considering the lottery now nets the state about $1 billion a year. When you factor in inflation, the amount promised by Camelot doesn’t seem to be much more.

And it’s to be accomplished by dramatically broadening the lottery’s reach. Plans call for the establishment of keno games in state bars and restaurants.

The administration has drawn a fair amount of heat for conducting its talks with Camelot under mostly hush-hush conditions. But the most troublesome aspect of all this seems to be that Corbett and company apparently believe privatization and expansion of the lottery can occur without the approval of the Legislature.

That’s brought howls of protest from Democrats, and also a few Republicans, particularly those opposed to gambling.

Technically, gambling isn’t a tax. But there is no practical difference. The state collects money and distributes it to assorted entitlement programs that inevitably grow and cry for more revenue.

As everyone knows, Pennsylvania’s lottery system benefits senior citizens — every last dime of it. Other states direct lottery funds to education and other purposes.

I don’t think it’s a coincidence that Pennsylvania ranks second only to Florida in the percentage of its population over the age of 65. The word has gotten out that Pennsylvania takes good care of its older folks by subsidizing everything from prescription drugs, to transportation, to rent and property taxes.

This occurs in a state with a relatively flat population that’s constantly losing political clout. Instead of catering to a more youthful population in ways that attract growth, Pennsylvania embraces the elderly.

Why? Because old people vote more regularly than younger ones.

And this money for senior citizens comes courtesy of a system that avoids official taxation while tapping the state’s lower economic rungs. Millionaires have no interest in playing the Daily Number, or any other state lottery game for that matter. It’s a form of gambling that appeals to people of modest means, hoping for a few quick bucks the easy way.

It’s a pretty shameful way to fund state programs when you stop and think about it.

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