06/01/2005 11:00PM

Pennsylvania slots facing obstacles

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A vast majority of Pennsylvania school boards failed to approve a plan to use slot-machine revenue to fund property-tax rebates by a May 30 deadline, but racing officials contend that the rejections will not affect the schedule to install machines and begin operation by late 2006 or early 2007.

The legislation, Act 72, would have enabled school districts to take a portion of revenues from slot machines in exchange for property-tax rebates, as long as the boards agreed not to impose additional income taxes in their districts without voter approval. Nearly 400 of the state's 501 school districts rejected the plan.

Robert Green, the chief executive officer of Greenwood Racing, which owns Philadelphia Park, said Wednesday that the rejections would not affect plans to install machines at 14 sites, including Philadelphia Park. Legislation allowing slots was passed last summer as part of a centerpiece of Gov. Ed Rendell's plan to cut property taxes by $1 billion.

"What it means," Green said, "is that some other legislation would have to be contemplated to determine how to distribute the money."

The rejections have cut into the momentum behind the slots effort, which supporters contend will raise money for education and revive the state's horse racing industry. The Pennsylvania legislature is scheduled to adjourn on June 30, and with the state budget not yet in place, it is unclear whether the legislature will seek to pass new legislation on slots revenue this year or wait until 2006.

Separately, the Pennsylvania Supreme Court is expected to issue a ruling this summer on the legality of the slot-machine bill itself, Act 71. Several anti-gambling groups and government watchdog groups challenged the legislation last year in a lawsuit, contending that the bill violated the state constitution.

Michael Geer, a spokesman for Pennsylvanians Against Expanded Gambling, a plaintiff in the lawsuit, conceded that the rejection by the school boards would not have a direct impact on the legality of slot machines. But he said that fallout from the rejection could weigh heavily if the court rules that the legislation is unconstitutional.

"If everything was going smoothly with Act 71 and then this happened with Act 72, a lot of people might just say that this is a speed bump that we can get through," Geer said. "But if not, then I think people are going to realize that the bold promises by the governor of $1 billion in property-tax relief might not be everything he said it was, and there might not be a whole lot of legislative momentum to legalize slots in the future."