Treasurer stresses need to begin repayment immediately to capitalize on investment income opportunities, provide much-needed benefit to property tax payers
HARRISBURG, Pa., May 25, 2011 /PRNewswire-USNewswire/ -- To ensure property tax relief, State Treasurer Rob McCord – an independently elected ex-officio member of the Pennsylvania Gaming Control Board – today outlined an equitable plan for the Commonwealth's 10 operating casinos to begin repaying loans totaling $63.9 million. The loans, made from the Property Tax Relief Reserve Fund between 2007-2010, were used to help finance the Board's operations during the early years of gaming in Pennsylvania when few slot machine facilities were operational.
The state's Fiscal Code requires the Gaming Control Board to adopt a repayment plan by June 30, 2011, but stipulates that casinos are not obligated to begin making payments until at least 11 licensed facilities have begun operating slot machines.
Treasurer McCord – who also serves as the legal custodian of the Property Tax Relief Fund – said reasonable doubt about when the 11th facility will commence operations should prompt lawmakers to amend the Fiscal Code to require those loan repayments begin July 1, 2011.
To further delay, McCord explained, creates the risk enough funds may not be available to trigger property tax relief payments next year. He said ensuring payments are made equally over a 10-year period – as allowed by law – ensures the fund benefits and grows from investment income which could total millions of dollars above other proposals that have been suggested.
"There have been at least five other proposals offered, but I believe no other proposal is legally valid unless it assesses each operating facility an annual amount that is proportionate to its gross terminal revenue, as compared to the statewide revenue total from slot machines for the same period," said Treasurer McCord. "Additionally, any repayment schedule that permits smaller payments in the early years followed by larger payments in the final years would adversely impact our ability to generate investment income, which ultimately benefits Pennsylvania's property owners."
"The General Assembly has consistently favored the policy of spreading the burden to repay the loan among as many gaming venues as possible, which helps minimize the cost to each casino. I agree with that in concept, but to wait for the 11th licensee to begin slot operations means it would be another year – possibly two years – before casinos would begin repaying the loan. That's two years of missed investment opportunities during which we could be generating returns that would help reduce property taxes."
Under Treasurer McCord's proposal, each operating gaming facility will be assessed a payment each year of a 10-year period. The assessment will equal a share of the total outstanding loan amount based on the proportion of the facility's gross slot machine terminal revenue (GTR) the previous fiscal year compared to the statewide GTR for the same period from all operating facilities. The assessments would begin July 1, 2011 if Treasurer McCord's recommendations are accepted.
To read a full copy of Treasurer McCord's position statement and proposal, visit www.patreasury.org.
SOURCE Pennsylvania Treasury Department