|
What $2.1 Billion in Monopoly
Gambling Licenses Could Buy Pennsylvanians
HARRISBURG--Today, The Commonwealth Foundation highlighted just some of the
programs that Pennsylvanians will lose out on if the General Assembly and Gov.
Rendell simply hand over $2.1 billion worth of monopoly gambling licenses to
horse racetrack owners virtually for free. The granting of these monopolies
would likely be the single largest corporate welfare subsidy in Pennsylvania
history.
"The horse racing industry is desperately working to make sure Pennsylvanians
are losers before even one slot machine enters the state," said Matthew J.
Brouillette, president of The Commonwealth Foundation. "By failing to auction
these gambling licenses to the highest responsible bidder, the General Assembly
and Governor Rendell will make millionaire racetrack owners into billionaires
virtually overnight while denying Pennsylvanians at least $2.1 billion in new or
expanded programs."
The Commonwealth Foundation noted just some of the many ways state government
could use the $2.1 billion in gambling monopolies to benefit all Pennsylvanians:
1. Return the money directly to its true owners--the taxpayers of
Pennsylvania--through a tax rebate or refund. "A $2.1 billion gambling license
windfall could provide a rebate of nearly $375 per current working man and woman
in Pennsylvania," noted Brouillette. "That's $750 for a working mom and dad
trying to make their family's financial ends meet."
2. Replenish Pennsylvania's "Rainy Day Fund," which contained more than $1.1
billion just two years ago and has been virtually emptied since. "Due to an
inability to control spending, Pennsylvania's 'savings account' has been
drained," said Brouillette. "But we have an opportunity to restore a prudent
fiscal reserve by putting just half of the proceeds from a license auction into
the 'Rainy Day Fund' and use the other half for much needed tax relief for
Pennsylvania families."
3. Significantly expand the Educational Improvement Tax Credit (EITC), which
just marked its two-year anniversary. Currently, the scholarship portion of the
program is limited to $20 million--a paltry 0.1% of the total public education
funding in Pennsylvania. "The EITC provides a much-needed alternative for
children trapped in failing public schools, especially for low-income and
minority families who desire a quality education for their children but lack the
financial resources to make school choices," argued Brouillette. "Just think of
what could happen if we merely allowed credits to equal 1% of public school
funding! Not only will children benefit from greater educational options, but
this could help Gov. Rendell meet his goal of reducing class sizes in
Pennsylvania's public schools."
4. Create a fund to pay for improvements to Pennsylvania's infrastructure that
can be used by all businesses. "Building and improving infrastructure
facilities-roads, bridges, water and sewer facilities that can be used by all
businesses-is a legitimate function of government," said Brouillette. "Gov.
Rendell could shelve his $1.5 billion bonding plan for politically chosen
'economic development' projects and instead use gambling license proceeds to
fund basic infrastructure projects. These programs will truly benefit all
Pennsylvanians and the economy, not just the politically connected few."
"Pennsylvania taxpayers have every right to get the value they deserve in
exchange for these lucrative gambling monopolies, and these are some of the ways
that they could realize that value," concluded Brouillette. "The interests of
hard-working, tax-paying Pennsylvanians should come first--not those of an
industry seeking a taxpayer-supported welfare check."
Support for auctioning off the gambling licenses is extremely high among
Pennsylvanians. A Triad Strategies/Susquehanna Polling and Research statewide
survey during the week of May 5th found that 84% of those who want expanded
gambling believe that "racetrack owners [should] be required to pay an upfront
licensing fee for the right to a limited monopoly on slot machines in
Pennsylvania." The full poll results will be released on Thursday, May 15.
Susquehanna Polling and Research President Jim Lee noted that "A majority of
Pennsylvanians who support the introduction of slot machines believe the owners
of racetracks should have to compete for the gaming licenses on a level playing
field and not be given preferential treatment. ... they are sending a strong
message to the state's political leaders that they should take whatever steps
are necessary to maximize revenues to the state, and upfront licensing fees for
the racetrack owners are the way to make it happen!"
Nearly two weeks ago, House and Senate members learned in testimony from Jeff
Hooke, a Washington, D.C.-area investment banker, that the value of 8 monopoly
gambling licenses would exceed $2.1 billion. Mr. Hooke's testimony was
published by The Commonwealth Foundation and distributed to all members of the
General Assembly.
Although gambling has been debated primarily as a moral and social issue, The
Commonwealth Foundation has been highlighting the economic policy implications
of the state handing out monopolies to politically connected individuals and
businesses for free. "Ultimately, we believe that it is individuals--not
politicians--who must decide whether or not they will gamble with their own
money," said Brouillette.
"The chief public policy question now is what should be done if Pennsylvania
politicians decide to create highly lucrative gambling monopolies," Brouillette
noted. "Should Pennsylvania auction these gambling licenses to the highest
responsible bidder and use the proceeds to benefit taxpayers, or should our
elected officials simply give them for free to politically connected individuals
and businesses? The answer to that question should be clear."
# # #
EDITOR'S NOTE: The Policy Brief, Pennsylvania's $2 Billion Corporate Giveaway by
Mr. Jeff Hooke, is available at
www.CommonwealthFoundation.org/Economy/pb03-05.pdf.
The Commonwealth Foundation is a free-market public policy research and
educational institute based in Harrisburg, Pennsylvania. For more information,
please visit
www.CommonwealthFoundation.org.
|
