Boscola: NIZ a "Pilot Project" That Can Be Modified

Late Saturday night. I was throwing hatchets into a wall, one of my usual weekend past times. Then my computer "binged," alerting me to an email. Instead of the usual Saturday night troll, it was an email from State Senator Lisa Boscola, who must put in late hours. She was writing to be about Allentown's NIZ.

Allentown's controversial NIZ is contained in Act 50 of 2009, amended by Act 26 of 2011. Both include language enabling an authority to "borrow" EIT owed to other municipalities to finance the arena and other improvements in the NIZ, essentially interrupting the revenue flow to other municipalities.

Boscola opposed the 2009 bill, but supported the 2011 legislation. I asked Lisa why she supported the 2011 Bill, and whether she would support a repeal of the EIT diversion. Below is her frank response.

Bernie, you are correct in your assumption that both bills were budget vehicles, enacting the state’s fiscal code. The fiscal code is the bill that implements the state budgets for those given years. As a result, both bills contained a number of provisions in addition to the NIZ language.

Regarding Act 50 of 2009 (HB 1614), I opposed this bill for a number of reasons. Most notably, the bill included a new tax on “little cigars” that had a negative impact on a major company in the Lehigh Valley, Cigars International. The legislation also raided the MCARE and Tobacco Settlement Funds to the tune of nearly $800 million in order to balance the budget. The transfer established a one-time funding source, which in turn led to a structural budget deficit in the next fiscal year. Finally, this bill implemented language that was detrimental to libraries and community colleges.

As to Act 26 of 2011 (SB 907), I supported this bill again for a number of reasons. First, the legislation included a long overdue transfer of surplus funds that had been in the hands of legislative leadership. This money should have been transferred back into the General Fund and not kept in the discretionary hands of legislative leaders. Also, as you know, I have been a long-time advocate of reforming our current property tax system to bring about property tax relief. A specific section of the Gaming Control Board’s budget added to this bill allows the Board to levy a surcharge on casinos immediately should there be insufficient funds in the reserve fund used to provide property tax relief.

This bill also transferred funding from PennVEST to fully fund Pennsylvania’s H2O program. This transfer allowed for important water and sewer projects to move forward, including a much needed grant to the Borough of Portland for a sewer facility upgrade. In Portland, the sewer upgrade led to Borough residents having the highest sewer rates in the entire Commonwealth. Thanks to this grant, ratepayers saw a substantial reduction in their monthly rates.

Finally, to answer your question about if I would support a repeal of the section of the NIZ law that allocates Earned Income Tax revenue from non-residents of the City of Allentown to pay off the bonds to finance the arena’s construction, it is critical for us in the General Assembly to see the impact this section has on local governments throughout the Lehigh Valley. I believe we need to look at economic development from a regional perspective. I have always believed this. That is why I advocated for the splitting of local share revenue for Bethlehem’s casino among several area municipalities. Economic development initiatives must be approached in a regional sense. However, the full fiscal impact of the NIZ on local communities is yet to be determined. As with any pilot project, modifications can be made to the current structure once we have all the information.

Although I appreciate Boscola's honest reply, this is a regional project concocted in Allentown, blessed in Harrisburg and provided life in Harrisburg. It provides a mechanism to take taxes from other regional entities without ever bothering to have told them what the Hell was going on.

It is much different from Casino "revenue sharing." Bethlehem and Northampton County share host fee revenue with Allentown, Easton (table games only) and Lehigh County. The arena and the NIZ will share no revenue with their neighbors. On the contrary, they are asking their neighbors to share in the expense, and the risk, via their EIT grab.