Good public policy or a money grab? Pa. lawmakers debate who gets casino dollars

HARRISBURG – A group of Philadelphia senators is championing language inserted into a state gambling bill that would divert about $2 million in casino revenues for city economic development and revitalization projects instead of sending it directly to schools or the city's general fund.

Its supporters argue it is smart public policy that will allow Philadelphia, like other cities that host casinos, to spread some of those funds to community groups for public interest projects.

Critics call it another form of WAMs, short for "walking-around money" – the long-assailed and largely obsolete practice of doling out tax dollars, with little or no accountability, to nonprofits, community groups, and other entities that legislators favor.

At the heart of the issue is how millions in gambling revenues are distributed every year in counties and municipalities that have casinos.

Under state law, casinos are required to kick back a portion of their slots revenues to their host community. In Philadelphia, that money, known as the local share assessment, is earmarked for the school district and the city's general fund.

But as legislators rush to cobble together budget-related legislation to expand gambling, as well as make a court-ordered fix to how much casinos pay in local share assessments, some in Philadelphia's Senate delegation have seized the opportunity to change how the city's take is distributed.

Under a bill approved last month by the GOP-controlled Senate, Philadelphia's local share dollars would increase – but some of the new money would be sent to the state Department of Community and Economic Development (DCED) to fund city-based development and revitalization projects.

Sen. Larry Farnese (D., Philadelphia), a key leader of a coalition advocating the change, said in an interview Tuesday that anyone in the city could apply for the DCED grants – including the school district – and that the state would make the final call on who gets the money.

"This isn't legislators going around and handing out checks," Farnese said. "Any group that is engaged in community or economic development, or involved in any project that is in the public interest, is going to have access to those dollars."

The way it stands now, Philadelphia gets about $7 million in local share dollars from SugarHouse Casino. By law, the first $5 million goes to the school district, and the rest to the city's general fund.

Statewide, casinos paid $95.5 million in local share assessments in the 2015-16 fiscal year, the last full-year figure available.

Under the Senate-passed bill, SugarHouse would pay $10 million annually for Philadelphia. The school district would continue to get the first $5 million; another $3 million would go to the city; and the remaining $2 million would go to DCED for the special projects, according to Senate officials.

Farnese and other Philadelphia Democrats who back the change note other communities that host casinos use some of their local share dollars for economic development and other projects.

Indeed, Montgomery County, home to Valley Forge Casino, funnels local share money through the Commonwealth Financing Authority, a state agency that in turn awards grants for environmental and other projects in the county, according to state officials.

And DCED administers local share funds for economic development projects in Washington and Fayette Counties, both of which have casinos, state officials said.

Still, Capitol insiders and other government officials privately acknowledge that legislators have a big say in who gets those grants. In fact, lawmakers submit lists of projects, in order of priority, that they want to see funded – and though officials at DCED score projects before awarding the grants, it is rare that legislative wish lists are ignored, according to one former state official familiar with the process who asked not to be identified.

"I think a lot of the programs at DCED are viewed as the most acceptable version of WAMs that can exist in today's culture," the state official said.

The city has taken a cautious approach to the proposed bill.

"The administration is obviously aware of this legislation," said city spokesman Mike Dunn. "We are monitoring its progress as it moves through both chambers, and we continue to be interested in working with members on both sides of the aisle toward a resolution that will be positive for the city and school district."

Philadelphia School District officials did not respond to a request for comment.

The Senate-passed bill is now in the GOP-controlled House of Representatives, where its fate is unclear. But some key Philadelphia Democrats are signaling support.

Rep. Ed Neilson (D., Philadelphia), who sits on the House Gaming Oversight Committee, said he can back the change as long as the school district and the city continue to receive at least the same amount of money that they do now.

"I'm OK with it as long as the city doesn't lose out on the deal and the school district stays whole," he said.

Asked whether the change would allow legislators to effectively hand out WAMs, he said: "We haven't had WAMs in Harrisburg for years. I don't even know what they are anymore."