Editorial: Gambling an inefficient way to solve Pennsylvania budget crisis

By The Pitt News Editorial Board

One hundred seven days into the fiscal year without a budget, it’s safe to say that Gov. Tom Wolf is having a difficult time working with Republicans in Harrisburg.

The main talking point over this budgetless time frame? What else? Taxes.

Wolf has proposed property and income tax increases to balance Harrisburg’s current budget deficit, but he faces strong resistance from Republicans. Last Wednesday lawmakers voted down the latest Wolf budget, 127 to 73. That budget proposal would have raised the personal income tax from 3.07 to 3.57 percent and place an extraction tax on natural gas drillers.

House Republicans, however, are looking for alternative ways to fund the government — and expanding gambling operations for the third time in six years is one of the top proposed options.

“I think we need to have a discussion first on what other revenues are on the table,” said House Majority Leader Dave Reed, R-Ind., as reported Monday in an article by The Post-Gazette. “We need to come to a conclusion on liquor reform. We need to address cost drivers like our pension system. We need to look at gaming options.”

Such expansions could include allowing casinos to offer Internet gambling to Pennsylvanians, as well as allowing casinos to station slot machines at Pennsylvania’s international airports.

Pennsylvania shouldn’t have to rely on gambling — an unsustainable and inconsistent form of revenue — because of Republicans’ stubborn clinging to ideology, especially when it comes at the expense of Pennsylvania’s most vulnerable.

According to a 2014 study from the University at Buffalo Research Institute on Addictions, people within low-income areas are affected most by gambling. The study found that, of nearly 5,000 individuals from disadvantaged neighborhoods, ages 14 to 90, more than 11 percent of residents were problem gamblers. Comparatively, the study found only a 5 percent rate of problem gambling in neighborhoods that ranked in the top one-fifth of communities based on economic advantage.

The study’s co-author and Research Institute senior research scientist John W. Welte, PhD, told the clinical magazine, Addiction Professional, that lower-income people are more prone to gambling more because they “Do not see many role models of financial success achieved through conventional means. Therefore, gambling may be viewed as one of the few opportunities for financial advancement, and perhaps provides the lure as a means for easily gaining money.”

This effect could be especially prominent in Pittsburgh, where 20.4 percent of residents fell below the poverty line in 2013, as compared to 11 percent of total Pennsylvania residents, according to the U.S. Census Bureau data.

The theory follows a 2006 survey of 1,000 Americans by Opinion Research Corporation for the Consumer Federation of America and the Financial Planning Association, which found that 21 percent of Americans believed that the lottery “would be their most effective and practical strategy for accumulating several hundred thousand dollars.”

Clearly then, the state only benefits from expanding gambling services by preying on the misfortune of the financially insecure.

In fact, it could be a large reason why gambling has historically not brought in large revenues for Pennsylvania in the first place.

When Harrisburg legalized gambling in bars in 2013, lawmakers estimated the resulting taxes would bring about $150 million a year to the state treasury, according to The Post-Gazette.

According to the Associated Press, however, it brought in only $554,000 of the state’s $30.6 billion in total tax collections that fiscal year.

While it’s true that taxes from casino gambling can be higher, and the revenue from casinos can certainly help to fund our schools — like our liquor tax does — there is a much more reliable option — tax higher income earners more.

Pennsylvania’s flat 3.07 percent income tax rate applies to people of all income brackets. We’re one of only seven states that utilize a flat income tax.

We need to shift the budget burden from low-earners to top-earners, but that can’t effectively be done without a progressive tax system — an argument that Wolf has seemingly given up on since he advocated for it while on the campaign trail. The rates need to go up for the top-earners if we want to have a budget that is sustainable and can provide long-term spending on services like education and health care.

Instead of focusing on short-term solutions to partisan divides, lawmakers need to start coming up with long-lasting solutions to our budgetary problems — otherwise, many of them may not find themselves in Harrisburg after the next election cycle.

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