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On September 28, , the Pennsylvania Supreme Court ruled that the local share assessment imposed under Section of the Pennsylvania Race Horse Development and Gaming Act violated the uniformity clause of the Pennsylvania Constitution because casinos were taxed differently based upon the amount of their gross revenue.
Mount Airy 1 LLC v. Philadelphia has unique provisions governing its Local Share Assessment because it is both a city and a county. All other counties receive revenue under a system that provides for a county local share, and a municipal local share.
The municipal local share formula under the statute differentiates between casinos located outside of Philadelphia based upon their gross terminal revenue or GTR for the year: The Supreme Court began its analysis by noting that it had previously struck down similar taxes.
Next, the court noted that it had invalidated a graduated income tax because it was not uniform. Kalodner , Pa. The Mount Airy Court then noted that income-based classifications had been held to violate the uniformity requirement in other tax cases.
Kane , Pa. The fact that casinos paid different rates based on their revenues was dispositive. Michael Sklar, an attorney representing Mount Airy, said the casino should be taxed at a percentage — not a flat rate — and that percentage should be applied across the board to all casinos.
Despite the lawsuit, Sklar said Mount Airy considers itself a good neighbor. Since the court ruled in Mount Airy's favor, it's now up to the state legislature to fix the law.
Paradise Township is a sleepy and bucolic town in the Pocono Mountains — where hiking trails, fishing streams, and the Mount Airy Casino Resort are valuable amenities.
Once flush with mountain resorts that have since shuttered or been in a slow decline, Gonze said the casino has been a boon for the community.
Gonze said the funds from the casino have mostly gone toward the town's infrastructure, including maintaining 35 miles of winding mountainous roads and repairing bridges.
The township also uses the money to help provide basic services such as the town's library and community center, fire and ambulance, all while keeping tax rates low for the township's roughly 3, residents.
Based on the Supreme Court ruling, Gonze expects Mount Airy will pay less in the future when it comes to the local share tax. He worries that would also mean less money for Paradise Township.
To Gonze and many other local leaders across the state, the casino money came as a promise from the state legislature to help pay for the wear and tear of hosting a casino.
That was the commitment of when Mount Airy came in," said Gonze. Scavello said he doesn't think the municipalities that host casinos, like Paradise Township, will be affected by changes to the law.
You just don't pull that out of an operating budget," said Scavello. But he said there could be an adjustment to the amount of local share dollars neighboring municipalities receive — especially in counties like Monroe and Erie — where the casinos are not making as much in slot revenues.
Mario Scavello is confident the legislature will fix the law by the May deadline. Erie County Executive Kathy Dahlkemper is also concerned. Without the gaming funds, Dahlkemper said the county would have to ask for a tax increase to pay the debt.
Not every county did. That was a deal we made a long time ago," said Dahlkemper. To Dahlkemper, part of the issue in fixing the law, could also mean changing how funds are distributed.
Typically, the community where the casino is located gets a share; as well as the county and some of the surrounding municipalities.
I think people want a piece of that. Kathy Dahlkemper, Erie County executive, says she has been working closely with state lawmakers to ensure the county continues to receive local share tax funds.
Most of the casino money goes to East Hanover where the casino is located and five surrounding communities; but the remaining dollars are pooled into a fund while a citizen's committee reviews grant applications to distribute the rest of the funds.
Haste says that most, if not all, of the county's 40 municipalities have gotten some funds from the casino. One project that would not have happened without the local share money was a new state-of-the-art fire company.
Typically, he said, central Pennsylvania fire companies have to fundraise to pay for new resources. In addition to the fire company, funds from the casino have been used for infrastructure, public safety — including police and EMS services — and to help cover administrative costs in Dauphin County.
Dauphin County Commissioner's Chairman Jeff Haste remembers when state lawmakers passed the gamin legislation and said there was a lot of fear among communities about hosting a casino.
To ensure gaming funds would continue to reach its local communities, Dauphin County signed a memorandum of understanding last November with Hollywood Casino's parent company Penn National Gaming, Inc.
Eric Schippers, senior vice president of public affairs for Penn National Gaming, said giving money to the county shows their commitment to the community.
If the legislature does not fix the law before July 1, Schippers said they would extend the agreement. We were going to be providing these payments to our host communities," said Schippers.