State court jeopardizes casino grants
The Pennsylvania Supreme Court has found that the tax that funds the popular Local Share Account grant program is unconstitutional.
However, legislators will have 120 days to come up with a new law before the decision takes effect.
The Local Share Account grant program is one of the most popular in the state. Boroughs, nonprofits, and economic development groups across the state count on it to purchase police cars and rehabilitate structures. Pennsylvania casinos have paid tens of millions of dollars to their host communities. The loss will have great impact locally.
The Supreme Court issued a decision earlier this month in a lawsuit filed by Mount Airy No. 1 LLC, the company which owns Monroe County’s Mount Airy Casino, against the Pennsylvania Department of Revenue, finding that the Local Share Tax levied under the state’s gaming law violates the equal protection clause.
Mount Airy argued that the Local Share Tax authorized by the state’s gaming law was applied unequally. It also argued that casinos that had less than $500 million per year in gross revenue have to pay an unequal share of the tax.
Under the state’s original 2004 casino law, casinos must pay at least 4 percent of gross slot-machine gambling revenues to their host communities. That includes 2 percent to counties and 2 percent or $10 million, whichever is greater, to municipalities.
The court didn’t have a problem with the local share tax itself, but rather the unequal way that it is applied.
Under Act 71, the state’s gaming law, casinos outside of Philadelphia are required to pay taxes on their gross revenue to the municipality and county where they are located. That money goes into the Local Share Account.
The LSA program is used to fund grants for projects in the counties where the casinos are located. Mount Airy’s is unique, because the surrounding counties — Carbon, Lackawanna, Northampton, Pike and Wayne — are also eligible.
In its opinion, the court recognized the importance of the LSA program to many municipalities. The court agreed to put a stay on the decision for 120 days so that legislators can have a chance to rewrite the law.