As Pennsylvania Gov. Josh Shapiro looks to get lawmaker approval on a budget by the end of June, he’s hoping his proposed tax on skill games makes it through.
In February, Shapiro floated the 52% tax rate on skill games in a budget bill address. Revenue from the tax, along with tax money from legal cannabis sales, would bring in an expected $292 million into state coffers to fund mass transit systems and boost public education.
However, his budget plan faces opposition from two bills in the Senate, both of which call for lower tax rates on skill games.
Competing legislation
Currently, gaming machines that feature skill games are unregulated in Pennsylvania, meaning the state collects no taxes from the machines that are rampant across the state. The governor and lawmakers want to make them legal like online casinos.
State Sen. Gene Yaw (R-23) has countered Shapiro’s proposal with Senate Bill 706, which calls for a much-smaller 16% tax on skill games to lessen the impact on small businesses that rely on revenue from the games.
State Sen. Chris Gebhard (R-48) has offered his own legislation on skill games. Senate Bill 756 would place the games under the jurisdiction of the Pennsylvania Gaming Control Board and would set the tax rate at 35%.
Investing in mass transit
According to reporting by WGAL-TV, Shapiro’s proposed $51.5 billion budget has from Democrats in the Pennsylvania General Assembly but lacks backing from Republicans. The state constitution requires the budget be completed by the end of the month.
The official PA government website suggests that funding would grow to $1.5 billion over the next five years, providing “the first significant increase in state for mass transit in more than a decade, benefiting 52 transit systems that serve nearly one million riders each day in rural, urban, and suburban communities across the commonwealth.”
Shapiro highlighted the benefits of his bill in a press conference this week.
“Just like we repair and maintain the bridges in rural and suburban communities, we owe it to the Pennsylvanians who take mass transit to be there for them and their families, too. Mass transit drives $5.4 billion in economic activity every year in Pennsylvania, and it enables businesses to affordably get their employees to offices and job sites. It’s well worth the investment in our budget.
“For two years in a row, I’ve proposed the first major new investment in mass transit in more than a decade. The House has ed that proposal three times, and it’s now up to the Senate to act.”
Dissenting voices
Sen. Kristin Phillips-Hill (R-28) told WGAL-TV that she strongly opposes the governor’s budget plan.
“We are on the precipice of tipping this commonwealth into financial disaster.”
The website of PA Senate Republicans echoed her reservations.
“The governor’s overly optimistic future revenue projections and wildly inaccurate future expenditure assumptions could eliminate the state’s emergency savings (also known as the Rainy Day Fund) and create the need for a multi-billion-dollar tax increase on Pennsylvania families within a year and a half.”
Weighing in on skill games in an opinion piece last month, the Pittsburgh Post-Gazette’s editorial board expressed concern that “treating them as a source of revenue on par with casino slot machines would ultimately privilege gambling behemoths over small establishments and community institutions.”
“Casinos want skill games to be treated on par with their own offerings because that would make the tax burden intolerable for many small establishments that have come to rely on the devices for secondary revenue. The gaming industry is perfectly happy to see neighborhood bars and diners and American Legions not just ditch their skill games, but fold entirely – all the more consumers for them to lure in. But we aren’t, and neither should state policymakers.”
As City and State Pennsylvania points out, the budget is supposed to be delivered by July 1, but isn’t always, noting that in 2024, the budget was finalized in July with the delay only causing “a minimal impact on state services,” and in 2016, battles over education funding caused it to be delayed by nine months.
