Pa. home and farm owners have until March 1 to try for tax cut

February 04, 1999|By RICHARD F. BELISLE, Waynesboro

CHAMBERSBURG, Pa. - Pennsylvania homeowners and farmers have until March 1 to sign up for a new Homestead tax exemption, which, while cutting their property taxes, would in all likelihood raise the income taxes they pay to their school districts.

The new law is part of Pennsylvania's 1998 tax reform aimed at shifting the tax burden off property owners.

It allows school districts and municipalities to exempt property taxes for home and farm owners up to 50 percent of the median value of the properties of those who applied for the exemption, said Gary Martin, chief assessor for Franklin County.

Property taxes of residents who don't apply won't be affected.

The law allows school districts to make up income losses resulting from the exemption and its ban of so-called nuisance taxes by raising earned-income tax rates to 1.5 percent.

Municipalities, which depend on property taxes for their budgets, cannot offset losses from the exemption with other taxes, said G. Warren Elliott, Franklin County Commission president.


Earned-income tax rates vary by school district. In Waynesboro the rate is 0.5 percent and brings in more than $1.6 million a year, said Jack Kennedy, finance officer for the district.

Nuisance taxes collected by the district include a per-capita tax under which each district resident over 18 pays $15 a year, an occupation tax which runs from $15 to $135 a year depending on a district resident's job, and an occupation privilege tax under which anyone earning more than $1,000 a year pays the district $10.

The taxes bring in nearly $600,000 a year, Kennedy said.

Martin said he doubts that any school district will participate in the exemption willingly because it's so cumbersome.

District residents who voted in the previous election can petition for a referendum to force their school district to participate; 5 percent of voters must petition.

Martin said that as of Thursday only about 70 residents had applied for the exemption. No tax breaks from the exemption will occur before 2001, Elliott said.

Excluding up to 50 percent of the median value could cut $10,000 off the assessed value of every property owner who applied for the exemption, benefiting owners of lower-priced properties most, Martin said.

"That's the purpose, to help out people at the lower end," he said.

The median values will change every year since applications must be renewed annually, he said.

Elliott said the commissioners will spend about $60,000 preparing the exemption. "We've already spent $13,000 on new computer software and training," he said.

The county applied for a grant to cover its costs.

The commissioners placed Homestead exemption application forms in the assessor's office, libraries, school district administrative offices and in the local offices of area state legislators. The county has also produced a brochure explaining the law to residents.

The Herald-Mail Articles