PA Property Tax Relief

More Pa. seniors to get tax relief

Lawmakers approved a plan to extend eligibility for property tax
rebates. It is expected to be passed into law soon.

By Mario F. Cattabiani and Amy Worden

Philadelphia Inquirer Staff Writers

Found online at:
http://www.philly.com/mld/inquirer/news/local/states/pennsylvania/144764
55.htm

* On the Web | Read a detailed summary of the property tax plan
<http://www.pasenate.com/SpecialSession.htm>

HARRISBURG - A legislative committee approved a landmark plan yesterday
that would expand by more than 400,000 the number of senior citizens who
qualify for property-tax rebate checks and require most voters to decide
whether to trade higher local income taxes for lower levies on their
houses.

And, when money from slot machines starts flowing to the state in 2008,
other homeowners would see smaller property tax bills, too.

Legislative leaders heralded the agreement, expected to pass the House
and Senate this week and be signed by Gov. Rendell, as a historic
document decades in the making. The money is expected to be delivered to
seniors next year.

"Property-tax relief is finally on the way," Rendell said shortly after
the six-member House-Senate Conference Committee unanimously endorsed
the bill last night.

The action comes in the last week the legislature meets before the May
16 primary - an election that has many incumbents, including several
leaders, fearing for their jobs after last summer's pay raise debacle.

The focus of the bill is the state's senior population - a demographic
that votes with greater regularity than any other.

Senate Majority Leader David Brightbill (R., Lebanon) said the proposal
was aimed at "the segment of society that needs help the most: seniors
on fixed incomes."

Brightbill, who is in a tough reelection battle, said he understood that
some other homeowners would be unhappy that they have to wait longer for
relief.

"The alternative is expectations and no plan," he said. "We are
providing tax relief in Pennsylvania, and for the first time since 1834
we have placed cost-control measures on schools." That was the year the
legislature established public school funding with taxes.

The bill would allow seniors making as much as $35,000 annually to
receive money back from the state Property Tax/Rent Rebate program.
Started in 1971, the program now allows only seniors making $15,000 or
less to receive up to $500 a year in rebates for rent or property taxes
they pay.

Last year, 321,667 people received rebates that averaged $384.

Officials estimate the bill would pump an additional $200 million into
the program, allowing 422,000 more seniors to meet the new income
guidelines. Poorer seniors also would get more than before.

Those making less than $8,000 a year would qualify for up to $650 a year
in rebates. Seniors with incomes of between $18,001 and $35,000 would
get $250 back.

Some seniors who spend more than 15 percent of their income on property
taxes might qualify for even bigger rebate checks, as much as $975,
under the bill.

State Rep. Lynn Herman (R., Centre), who chaired the conference
committee, called the bill "legislatively practical and fiscally
prudent."

"We're not only adding more low-income seniors, we are adding
middle-income seniors," he said.

In Philadelphia, gaming revenue will go to reduce wage taxes, not
property taxes.

The bill also would require voters in the state's public school
districts - except Philadelphia, Scranton and Pittsburgh - to decide a
ballot question next May asking whether to increase local income taxes
for an even further reduction in property taxes.

Those three districts were left out of the bill because they already
impose heavy local income taxes, officials said.

Come next school year, all school districts except Philadelphia would be
required to get voter approval for any budget that increases taxes by
more than the rate of inflation. That provision, known as the back-end
referendum, is widely blamed for the failure of the last stab at tax
reform, known as Act 72 of 2004.

Eight of 10 districts chose not to participate in Act 72, believing it
would harm their fiscal ability to run schools.

The conference committee bill would, when enacted, repeal that law and
allow voters in each district - not school boards - to decide whether
they want to shift local taxes.

Timothy Allwein, a spokesman for the Pennsylvania School Boards
Association, said yesterday the new proposal had some improvements over
Act 72, including more generous exceptions to the tax rates that will
trigger referendums.

But, he said, "I don't think the referendums are an appropriate way to
make decisions about education. To restrict our means to raise revenues
is going to result in services to children being cut."

The conference committee bill most resembles the plan from the state
Senate. It doesn't include more sweeping changes offered in the House,
including hiking the state sales tax to trim property taxes.

That the bill is moving now, after months of talks, was not lost on
Capitol observers.

"They have to have something in their hands to take back to the
constituents. It may be too little too late," said Gene Stilp, a
Harrisburg activist, noting that many legislators are facing primary
opponents in two weeks.

Earlier yesterday, Stilp joined other activists on the steps of the
Capitol to stage what they called a reenactment of July 7 - when
lawmakers raised their base salaries by 16 percent. After a public
outcry, the raise was repealed in November. "They put themselves first
on July 7 and now, 10 months later, they are finally getting around to
the people," Stilp said. "It should have been the other way around."

Tax Plan Highlights

Expands Property Tax and Rent Rebate Program

The bill would increase the number of seniors eligible for the property
tax rebate from about 320,000 to roughly 740,000. It would:

Raise the income eligibility requirements from $15,000 to $35,000 for
homeowners. (The eligibility requirements remain the same for renters,
but the rebate amount would increase.)

Provide $650 to homeowners and renters earning $8,000 or less, and $500
to those earning $8,001 to $15,000.

Homeowners earning more than $15,000 would receive $300 (for those
earning between $15,001 and $18,000) or $250 (for those earning between
$18,001 and $35,000).

2007 Primary Election Referendum

All school districts, except Philadelphia, Scranton and Pittsburgh,
would present voters with a referendum question asking whether they
agree to increase the earned income tax or authorize a personal income
tax to provide property tax relief.

Repeal of Act 72

Gov. Rendell's first attempt at property tax relief in 2004 was Act 72.
Under that law, a share of the revenue anticipated from the legalization
of slots gambling would have gone to 111 of the state's 501 school
districts that agreed to raise the earned income tax and put future
budgets up for voter approval if spending increased by a certain
percentage.

School Budgets

The 111 school districts that opted into Act 72 must submit, as required
under that law, their budgets for voter approval if the budgets exceed a
certain inflation rate index, beginning in 2006. Those that did not opt
in must do the same in 2007, under the bill the conference committee
approved.

Slots Revenues

All school districts except Philadelphia would receive slots revenue to
reduce the property tax rate. The initial payment to school districts
would be made once the state's share of the revenue from slot parlors
reaches $400 million. In Philadelphia, gaming revenue would go to reduce
wage taxes, not property taxes.

ONLINE EXTRA

To read a detailed summary of the plan, go to
http://go.philly.com/propertytax.

________________________________

Contact staff writer Mario F. Cattabiani at 717-787-5990 or
mcattabiani_at_phillynews.com. Inquirer staff writer Dan Hardy contributed
to this article.
Received on Tue May 02 2006 - 07:39:07 PDT