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Commonwealth of Pennsylvania House of Representatives House Appropriations Committee

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Commonwealth of Pennsylvania House of Representatives House Appropriations Committee COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES HOUSE APPROPRIATIONS COMMITTEE STATE CAPITOL ROOM 14 0 HARRISBURG, PENNSYLVANIA WEDNESDAY, FEBRUARY 3, 2 010 11:00 A.M. IN RE: PUBLIC HEARING GAMING CONTROL BOARD BEFORE: HONORABLE DWIGHT EVANS, CHAIRMAN HONORABLE WILLIAM F. ADOLPH, JR. HONORABLE WILLIAM F. KELLER HONORABLE DOUGLAS G. REICHLEY HONORABLE KATIE TRUE HONORABLE DAN FRANKEL HONORABLE GORDON DENLINGER HONORABLE KATHY MANDERINO HONORABLE SCOTT A. PETRI HONORABLE GREG VITALI BRENDA S. HAMILTON REPORTING P.O. BOX 165 ELM, PENNSYLVANIA 17 521 717.627.1368 (FAX) 717.627.0319 (CONT'D) HONORABLE MATTHEW D. BRADFORD HONORABLE TIM BRIGGS HONORABLE H. SCOTT CONKLIN HONORABLE EUGENE DePASQUALE HONORABLE BRIAN L. ELLIS HONORABLE JOHN R. EVANS HONORABLE MAUREE GINGRICH HONORABLE THOMAS H. KILLION HONORABLE WILLIAM C. KORTZ, II HONORABLE DEBERAH KULA HONORABLE BRYAN R. LENTZ HONORABLE DAVID R. MILLARD HONORABLE TIM MAHONEY HONORABLE CHERELLE L. PARKER HONORABLE MARIO M. SCAVELLO HONORABLE JOHN J. SIPTROTH HONORABLE MATTHEW SMITH HONORABLE RICHARD R. STEVENSON HONORABLE JEWELL WILLIAMS ALSO PRESENT: HONORABLE BRYAN BARBIN HONORABLE PAUL COSTA HONORABLE FLORINDO J. FABRIZIO HONORABLE ROB W. KAUFFMAN HONORABLE RON MARSICO HONORABLE EDDIE DAY PASHINSKI HONORABLE MARGUERITE QUINN HONORABLE JOHN P. SABATINA, JR. HONORABLE DANTE SANTONI, JR. HONORABLE TIM SEIP HONORABLE EDWARD G. STABACK MIRIAM FOX, MAJORITY EXECUTIVE DIRECTOR ED NOLAN, MINORITY EXECUTIVE DIRECTOR ERIK RANDOLPH, SENOR RESEARCH ANALYST STEPHEN MISKIN JOHNNA PRO, PRESS SECRETARY LISA FRAELICH, COMMITTEE SECRETARY BRENDA S. HAMILTON, RPR REPORTER - NOTARY PUBLIC INDEX NAME PAGE GREG FAJT, CHAIRMAN, 5 GAMING CONTROL BOARD KEVIN F. O'TOOLE, 2 6 EXECUTIVE DIRECTOR, GAMING CONTROL BOARD ALSO PRESENT: DAVID RHEN P R O C E E D I N G S CHAI^IAN EVANS: I'd like to reconvene the House Appropriations Committee meeting. Mr. Chairman, welcome, welcome to you and the members of the Gaming Commission who are here. What I'd like to do is go directly to the questions. First question I'd like to start off, we've been spending a lot of time talking about jobs and the aspect of jobs. Can you in a very specific way tell us exactly what has it meant in terms of the gaming explosion, in terms of the infrastructure in the last couple of years, jobs, direct jobs, indirect jobs, relating to -- also to your budget? But specifically talk about what this industry has meant. And if you can put it in comparison to New Jersey, West Virginia, Ohio, and the -- and the benefit of it and what you've been able to do. Can you speak on that issue? MR. FAJT: Thank you, Mr. Chairman. First of all, thank you for having us here today. Before I get started, I do want to introduce the two gentlemen with me at the table. To my left is our executive director, Kevin O'Toole. Kevin comes to the gaming board with 28 years' experience in the gaming industry, sixteen as a deputy attorney general in the gaming area in New Jersey and the last twelve with the Oneida Indians in New York. To my right is Dave Rhen. Dave is our -¬ the head of our budget office in the gaming control board. And so thank you again for -- for having us here today. To answer your question specifically, Mr. Chairman, this has been a resounding success. Gaming has been a resounding success in Pennsylvania. Gaming has created over 8,000 full-time jobs in Pennsylvania over the last three years. In addition to those 8,000 full-time jobs -- and those are jobs that can sustain a family, that have health benefits, that have a pension attached to them. In addition to those 8,000 full-time jobs, the gaming industry has also created another 8,000 jobs in the construction industry. These casinos were multi-million dollar facilities. We have nine of them up and running in Pennsylvania right now. The tenth one is scheduled to open in Philadelphia in September -- or in July. Those construction jobs were -- were -- were big time jobs, as I said. A hundred million -¬ hundreds of millions of dollars for each one of these facilities, and that -- and that created an additional 8,000 construction jobs. In addition to that, because of what you did on -- earlier this year, January 7th the bill was signed by the Governor, you have authorized table games to be implemented in Pennsylvania. We believe that over the next six to nine months that table game component will create another 5,000 jobs in Pennsylvania. Full-time jobs, again family-sustaining jobs, with benefits, with a pension. So over the next six to nine months, Mr. Chairman, we believe that there will be 13,000 full-time jobs in Pennsylvania. In addition to that, these casinos every day spend money in the local communities. They use the dry cleaners for their -- for their uniforms. They use the linen services. They use the local bread maker. These folks come in every day to deliver good and services in Pennsylvania casinos. Millions, millions of dollars every month that is being spent in the local communities. Obviously that's creating additional jobs. So from the job standpoint, in -- in my opinion -- and I admit I'm a little biased here. But we have a great story to tell. We're very proud of where we are, both as a board and -- and our staff in the implementation of -- of gaming in Pennsylvania. And as I said, you know, 13,000 j obs. Name another industry in Pennsylvania that's created 13,000 jobs over the last three years. And I'll tell you, you don't have to think long because there aren't any. CHAIRMAN EVANS: Talk a little bit about in comparison to other states around us, New Jersey and competition. You know, what's going on in Ohio, West Virginia, Maryland. MR. FAJT: What we — what we see nationally is a reluctance by state legislatures to raise taxes. And -- and so gaming is -- is kind of the new cause du jour for -- for getting additional revenues into the state budgets. So we will face increased competition. Ohio just authorized four casinos throughout their state. Delaware and -- Maryland are expanding gaming. West Virginia just authorized table games I believe at their fourth facility in their state. So we will have increased competition from the other states. But what I believe is that Pennsylvanians will stay at home. We have the pretty significant distinction this month of December of surpassing New Jersey in slot revenue. That's the first time that's happened. They've been in existence for many, many years. As you know we've been in existence for three years, and this past December we eclipsed New Jersey in slot revenue. We did that with three less casinos and 5,000 less slot machines than they have in New Jersey. What that signifies to me is that Pennsylvanians are staying home. Governor Rendell said it all along. He said Pennsylvanians, given the opportunity, would prefer to have this type of adult entertainment, gambling, in their own state to provide property tax relief and economic development and to help the horse racing industry as opposed to sending that money to West Virginia, New Jersey, Ohio -- Ohio and New York. We'll keep the money at home and use it for our benefit. That's what we're seeing. I believe that that will continue. I think if Ohio expands into gambling, Pennsylvanians are not going to drive three hours to go to Cleveland when they can travel 20 minutes and go to The Rivers or Presque Isle or -- or The Meadows. So I believe that our folks will stay home. I think what you did in January with the advent of table games is going to be a boon to the industry. And it will significantly help the -- the bottom line on the budget with increased revenues. CHAIRMAN EVANS: Talk a little bit about your specific budget and your requests as a result of the picture you have painted and your needs to, you know, to continue to -- to lead this effort. What you need for your budget. MR. FAJT: I'm smiling, because I think it was Representative Scavello said that this is my third time in the last three years wearing a different hat coming before the Appropriations Committee and -- and -- and we don't always get a question about the budget. As all of us know, these are opportunities for you to ask questions about, you know, anything on your mind involving our specific industry. But -- so I thank you for the -- for the budget-related question. Specifically, we're here today to ask for an appropriation -- ask for authorization to spend $37.39 million. In addition to that, there's a $2 million component for the local law enforcement grants. So the total ask is $39.3 million, $39.4 million. The important thing to remember is that there is no general fund money in our request. Our expenses are paid by the gaming industry. There is a loan component, which the gaming industry will have to pay back once we get 11 casinos up and running. But there is no state general fund money that goes to fund the gaming control board. So our specific request is for authorization to spend $39.39 million, 37.39 of that is our actual gaming control board spend number. Most of our increase, we're asking for an increase of 3.6 million. That's about a 10.8 percent increase. And when somebody looks at that, you know, you kind of blanch and say that's -- in these economic times, a 10.8 percent increase is significant.
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