Fleagle: Renters lose in tax-relief law

August 13, 2004|by RICHARD F. BELISLE

WAYNESBORO, PA. - Renters will lose and retired property owners will win under Pennsylvania's new gambling-funded property tax relief law, State Rep. Patrick Fleagle said Thursday.

Fleagle, R-Franklin, voted against the bill. He said it misleads the public into thinking there will be real tax reform. It just shifts school property taxes by raising earned income taxes, he said.

Most Pennsylvania residents currently pay 1 percent of their earned income, half of which goes to their school district and half to their municipality.


Under the law, school districts will have to raise their earned income tax rate by a minimum of 0.1 percent to make up for losses in real estate taxes.

The property tax relief bill will be funded by the state's take from slot machines.

Nobody yet knows how much that will be, Fleagle said.

The House Appropriations Committee came up with different scenarios showing how much a school district could receive from the gambling money:

  • If the state takes in $1 billion from slots, Waynesboro would get about $1.2 million to reduce school taxes by 21 percent. That comes to about $198 per homestead, no matter the assessment.

  • If the state gets $500 million, the district's share would be about $600,000 to cut property taxes by 13 percent or $128 per homestead.

  • In the Greencastle-Antrim School District, $1 billion would give the district about $1 million to cut property taxes by 21 percent or $263 per homestead.

  • If the state's take is $500 million, Greencastle-Antrim would have $521,000 to cut real estate taxes 13 percent or $158 per homestead.

  • At $1 billion, the Tuscarora School District, which serves Mercersburg, Pa., would get about $1 million to cut its school taxes by 25 percent or $263 per homestead.

  • If the number from slots is $500 million, the district would get $523,000 to cut taxes 15 percent or $136 a year per homestead.

Landlords probably would not pass on any cuts in their school taxes to their tenants. At the same time, the tenants' earned income taxes would go up by at least 0.1 percent. "They'll be the real losers," Fleagle said.

Retired property owners would benefit from reduced real estate taxes. Since retirement income is not taxed in Pennsylvania, they would benefit two ways, he said.

Waynesboro Schools Superintendent Barry Dallara explained Act 72-2004 to school board members this week, saying the board has until May 30, 2005, to adopt a resolution to be eligible for state gaming funds.

The law also gives school districts the option of letting voters decide in referendums if they want to raise their earned income taxes to cut their school taxes.

If a referendum fails, the district would be mandated to raise its earned income tax rate by at least 0.1 percent.

Act 72 also affects a school district's ability to issue new debt.

Debt incurred before Sept. 3 will be considered as existing debt. After July 1, 2005, voter referendums will be required to approve any new debt, according to the law.

The Waynesboro School Board this week considered setting up a borrowing limit of $50 million for needed school building repairs. The members plan to take a final vote on the issue Aug. 24 to beat the Sept. 3 deadline.

The Greencastle-Antrim School Board plans an Aug. 26 vote on a $3 million proposal.

The Chambersburg Area School Board is looking at a $132 million appropriation for major school construction projects.

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