Senate advances high-profile pension reform and gaming expansion bills

The Pennsylvania Senate on Tuesday took action on two high-profile pieces of legislation: one that would significantly reform public pensions and the other that would expand gaming.

Both are seen as major priorities for Pennsylvania’s Republican-controlled General Assembly.

Starting with Senate Bill 1 – the public employee pension reform measure – the Senate Finance Committee voted along party lines to “move the process forward” so the bill can be worked on as negotiations on compromise legislation continue over the coming days and weeks.

The legislation, currently in identical form to what a conference committee reported out at the end of last session, is a vehicle for a to-be-amended piece of legislation.

Committee Minority Chairman Sen. John Blake (D-Lackawanna), said since his caucus opposed the legislation in its current form last session, it will do so in the current session.

“I realize that we are taking this business up in committee today for the purposes of positioning a bill for future action and, customarily in this building, we talk about moving the process along; but that being said, this is still the conference committee report that the minority caucus opposed last session,” he said.

According to Senate Majority Leader Jake Corman (R-Centre), who is the prime sponsor of Senate Bill 1, the Senate is currently working closely with the governor and the House of Representatives to try to come to an agreement on legislation.

“We’re optimistic that this is a start that will get us to a finish line,” he said. “But, these bills are tricky (with timing) because a lot of times, things are out of our control because you have the systems, the IFO” – the Independent Fiscal Office – “and things like that.”

He noted that the two pension systems and the IFO are already scoring a likely omnibus amendment to the bill that will encompass the hoped-to-be compromise proposal.

However, as May turns to June and all eyes start looking toward a budget agreement, Corman did note that public pension reform legislation is not being tied to the budget’s passage.

“It’s not tied to anything, there is no agreement on anything other than pensions, there are no outside sources,” he said. “We’re trying to get a pension bill done. It’s difficult enough without bringing other issues into play on it. It’s still obviously a very important issue that we haven’t resolved yet and we’re going to try to continue to push it. I think all four caucuses and the governor are working together to try and reach a solution.”

Speaking at the Pennsylvania Press Club Luncheon Monday, House Speaker Mike Turzai (R-Allegheny) said he is confident a pension reform measure will likely get done in June.

“We are going to be at the forefront, but we need to be at the forefront given our unfunded liability and where we need to take Pennsylvania into the future,” he said. “I think like we did with privatization, our team…has continued to put the pressure on the need to do pension reform along with our Senate colleagues.”

As to gaming expansion, the Senate quickly advanced through two different standing committees legislation that articulates the Senate’s position on what is feasible in that chamber on the issue.

While the proposal does include proposed expansion measures like the legalizing and regulating of fantasy sports, iGaming, and iLottery, it does not include the House priority of video gaming terminal (VGT) legalization, nor a promised $100 million in gaming expansion for the current FY 2016-2017 budget promised last July.

According to a fiscal note attached to the legislation, the State Gaming Fund will see a net increase of $19 million next year, the General Fund will see an increase of between $109 million and $146 million depending on participation, and the Lottery Fund will see an increase of $18.9 million.

Additionally, $4 million will be put in a compulsive and problem gambling fund from iGaming tax revenue and $16.2 million will be put into an account for casino marketing and capital investment paid by a new .5 percent daily assessment on casino gross terminal revenue.

The legislation also proposes to fix the local shares assessment by levying an annual slot machine license operation fee on category one and category two licensed gaming entities at 20 percent of the entity’s $50 million slot machine license fee paid at issuance – essentially $10 million from each casino.

The fees will then be distributed by the state to the host community.

Senate Appropriations Committee Majority Chairman Pat Browne (R-Lehigh) noted that while some of the provisions, including VGTs and the local shares fix, are different than what the House had prioritized, negotiations are ongoing on a compromise bill.

“This is where we believe the Senate is at this point,” he said. “Obviously, we are negotiating with the House and there could be some changes, but this is what we believe we would like to carry.”

The legislation passed through the Appropriations Committee with strong bipartisan support, garnering only four negative votes.

Browne also said that the $100 million promised for the current fiscal year from gaming expansion will have to be accounted for in some other way, taking actions in the current year to close the gap in a fiscally responsible manner.

“The $100 million we will realize will be in 2017-2018,” he said. “The $100 million we had booked – and at the point in time we thought was probable given the time we had to do it – will have to be accommodated in 2016-2017 through another source.”

A final vote on the proposal is expected Wednesday

According to House Republican Caucus spokesperson Steve Miskin, the House will review the legislation when it returns from the Senate.