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HOUSE of REPRESENTATIVES COMMONWEALTH of PENNSYLVANIA * * * * Budget Hearing Gaming Control Board * * * * House Appropriations C

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HOUSE of REPRESENTATIVES COMMONWEALTH of PENNSYLVANIA * * * * Budget Hearing Gaming Control Board * * * * House Appropriations C HOUSE OF REPRESENTATIVES COMMONWEALTH OF PENNSYLVANIA * * * * Budget Hearing Gaming Control Board * * * * House Appropriations Committee Main Capitol Building Majority Caucus Room 140 Harrisburg, Pennsylvania Thursday, February 23, 2012 - 9:00 a.m. --oOo— BEFORE: Honorable William Adolph, Jr., Majority Chairman Honorable Scott Petri Honorable Mauree Gingrich Honorable Gordon Denlinger, Subcommittee Chair on Fiscal Policy Honorable Brian Ellis, Subcommittee Chair on Criminal Justice Honorable Thomas Killion, Subcommittee Chair on Economic Impact and Infrastructure Honorable David Millard, Subcommittee Chair on Health and Welfare Honorable John Bear Honorable Martin Causer Honorable Jim Christiana Honorable Gary Day Honorable Glen Grell Honorable T. Mark Mustio Honorable Bernie O'Neill Honorable Michael Peifer Honorable Scott Perry Honorable Tina Pickett Honorable Jeffrey Pyle Honorable Thomas Quigley Honorable Curtis Sonney Honorable Joseph Markosek, Minority Chairman Honorable Michael O'Brien Honorable Paul Costa BEFORE: (CONT'D) Honorable Steve Samuelson, Minority Subcommittee Chair on Education Honorable Ronald Waters, Minority Subcommittee Chair on Criminal Justice Honorable Michelle Brownlee Honorable H. Scott Conklin Honorable Deberah Kula Honorable Tim Mahoney Honorable John Sabatina, Jr. IN ATTENDANCE: Honorable John Evans Honorable Mark Gillen Honorable Curt Schroder Honorable Robert Godshall Honorable Ron Marsico Honorable Carl Metzgar Honorable RoseMarie Swanger Honorable Nick Kotik Honorable Vanessa Lowery Brown ALSO PRESENT: Dr. Edward Nolan, Majority Executive Director Miriam Fox, Minority Executive Director C O N T E N T S SPEAKERS PAGE Gaming Control Board William Ryan, Chairman 6 Kevin O'Toole, Executive Director.... 6 SUPPORT INDEX REQUEST FOR PRODUCTION OF DOCUMENTS Page Line Page Line Page Line 14 8-15 27 1-4, 67 17-25 18-21 68 3-8 73 22-25 74 1-4, 9-14 79 6-9, 20-11 CHAIRMAN ADOLPH: Good morning, everyone. I would like to call to order the House Appropriations budget hearing. The first item on today's agenda is the budget hearing for the Gaming Control Board. Before we get started, I would like everyone here to introduce themselves. And my name is Bill Adolph. I am the Republican Chair of the Appropriations Committee. I am from Delaware County. DOCTOR NOLAN: Ed Nolan, Executive Director, Appropriations Committee. REPRESENTATIVE MUSTIO: Mark Mustio, Allegheny County, 44th Legislative District. REPRESENTATIVE PETRI: Scott Petri, State Representative, Bucks County. REPRESENTATIVE KILLION: Tom Killion, Chester and Delaware counties. REPRESENTATIVE SONNEY: Curt Sonney, Erie County. REPRESENTATIVE DAY: Gary Day, Lehigh and Berks counties. REPRESENTATIVE BEAR: John Bear, Lancaster County. MS. FOX: Miriam Fox, Executive Director, House Appropriations Committee. REPRESENTATIVE CONKLIN: Scott Conklin, Centre County. REPRESENTATIVE GRELL: We are hiding over here. Glen Grell, Cumberland County. REPRESENTATIVE GINGRICH: And I am hiding with him. I am Maureen Gingrich, Lebanon County. REPRESENTATIVE PICKETT: Tina Pickett, Bradford, Sullivan, Susquehanna counties. REPRESENTATIVE CAUSER: Martin Causer, McKean, Potter and Cameron counties. CHAIRMAN MARKOSEK: Hi, I am State Representative Joseph Markosek, Allegheny, Westmoreland counties. The aforementioned Miriam Fox is our Executive Director. She is to my immediate right. And we will have the members introduce themselves. Mike. REPRESENTATIVE O'BRIEN: Good morning. You guys probably don't know me, but I am Mike O'Brien from Philadelphia. REPRESENTATIVE COSTA: Good morning, everybody. Paul Costa, Allegheny County. REPRESENTATIVE MAHONEY: Tim Mahoney from Fayette County. REPRESENTATIVE SABATINA: John Sabatina, Philadelphia County. REPRESENTATIVE CONKLIN: I just wanted to do it twice. Scott Conklin, Centre County. REPRESENTATIVE KULA: Representative Deb Kula, Fayette and Westmoreland counties. REPRESENTATIVE BROWNLEE: Michelle Brownlee, Philadelphia County. CHAIRMIAN ADOLPH: And thank you. It's my pleasure to introduce to the committee Mr. Bill Ryan the Chairman of the Gaming Control Board and Mr. Kevin O'Toole the Executive Director. Good morning, gentlemen. MR. RYAN: Good morning. MR. O'TOOLE: Good morning. CHAIRMAN ADOLPH: If you would like to introduce the Control Board behind you, go right ahead, Mr. Ryan. MR. RYAN: I will, sir. There are two of my colleagues here present today, Gary Sojka and Keith McCall, sitting behind Kevin and me. CHAIRMIAN ADOLPH: Thank you. MR. RYAN: They are going to leave the heavy lifting to us, apparently. CHAIRMAN ADOLPH: And if you would like some opening brief comments, you can go right ahead, and then we will get into questioning. MR. RYAN: Thank you very much, Mr. Chairman. They will be brief. First and foremost, the board's budget does not require any money from the General Fund. Our budget as well as the gaming related budgets of the Attorney General, the Department of Revenue and the PA State Police are all funded by the gaming industry and not the taxpayers of the Commonwealth. That being said, the board is cognizant of the need to regulate strictly but efficiently, and our Fiscal Year 2012-2013 budget request reflects that philosophy. The board has requested, and Governor Corbett has recommended, a $38.098 million appropriation for Fiscal Year 2012-2013. Upon subtracting the statutorily mandated $2 million for local law enforcement grants, the board's administrative budget request stands at $36.098 million which represents an increase of 1.7 percent, or $597,000, over our Fiscal Year of 2011-2012 administrative appropriation. We have been able to keep our requested increase low despite the fact that our pension, health and worker's compensation benefit costs are increasing. They are up 51.9 percent, 6.5 percent and 5.3 percent, respectively. And we will need the funds to add 12 onsite regulators at the two new Category 3 casinos. Valley Forge will open on March 31st of this year, and we project that Nemacolin will open in February of 2013. We have been able to do this by becoming more efficient, which is evidenced in the reduction of our operating budget by approximately $1.2 million, or 16.5 percent, due to lower background investigation costs, reduced professional services expenditures, and reduced lease and telecommunication costs. I should add here, Mr. Chairman, that also in the request this year will be enough money to meet the statement by the Governor concerning increases for state employees, which as I understand are 1.1 percent in July -- Or excuse me. One percent on July of this year and then two-and-a-quarter percent on April 1st, 2013. The costs would cover management and non management, but it should be noted here that about 78 percent of our employees are Union and those costs are therefore mandated by the Union contract that has already been negotiated between the administration and the employees. My commitment to you is to continue to review our expenses throughout the year and where possible continue to reduce our costs while still maintaining the necessary funding level required to strictly regulate the gaming industry. Chairman Adolph, Chairman Markosek, thank you for allowing a brief opening statement. Kevin and I will be happy to at least attempt to answer your questions. CHAIRMIAN ADOLPH: Thank you. I would like to get this on the record, because I have known the Chairman of the Gaming Control Board for quite a few years, and I just want to talk a little bit about this man's background. He is a former District Attorney from Delaware County, twice elected by the people. He also worked in the PA Attorney General's Office. I am very proud that we have as the Gaming Control Board Chairman, Bill Ryan, who is a law and order guy. And he is going to be able to -- If anybody is going to be able to keep this industry in line, it is going to be Bill Ryan. And I think his selection should be noted, and I think you are going to see this industry be very successful, and it is going to benefit the people of PA under his leadership. So with that being said, the first question is going to be by Representative Scott Petri. REPRESENTATIVE PETRI: Thank you, Mr. Chairman. I know you wouldn't be able to see me behind this podium, so I am going to just stand up here. I want to make sure that the facts that we have are correct. It's my understanding that their loan, that the $36.1 million loan from the Gaming Control Board, to start things up, has now been repaid to the General Fund but is still owed to the Control Board; is that correct? MR. RYAN: It's my understanding that that loan is outstanding, Representative. And under, I believe, the statute that loan does not have to be repaid until all 14 casinos are up and running. REPRESENTATIVE PETRI: And then I understand that, and you may need some legislative help in that regard. But has the board talked about whether we will ever get to that point with regard to all 14 being up and running, and if we are not, whether there should be a time period set where that loan would be repaid? And does the board have a position about whether an interest should be charged at some point in time? MR. RYAN: I have only been on the board since September, Representative. We haven't discussed it, that I can recall. We expect to have 14 casinos sooner or later. We will. It's my understanding, however, that the board alone is not in a position to do anything about this. If there is going to be any change, it would probably have to come from the legislature. REPRESENTATIVE PETRI: And I would just share with you, just as one representative: It would be my interest to set a benchmark sooner rather than later, in the future, with an opportunity for parties to begin to assess what their responsibilities will be. But this money needs to be repaid.
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