Tax relief forms go out in Pa. this month

October 13, 2004|by DON AINES

CHAMBERSBURG, PA. - More than 52,000 Franklin County property owners will receive applications this month to qualify their homes and farms for school tax reform relief, but lower real estate taxes could be a few years down the road.

By Oct. 18, the 501 schools districts in Pennsylvania must send applications for homestead and farmstead exclusions to property owners, according to a timeline for the Homeowner Tax Relief Act. A second mailing will go out by Dec. 31 to those who have not returned applications to county tax assessment offices, according to Gary Martin, Franklin County's chief appraiser.

Property owners have until March 1 to return the applications to the tax office, which has until March 31 to determine whether a property is eligible, Martin said. His office has 30 days from receipt of each application to notify the property owner.


The exclusion applies only to homes and farms with more than 10 contiguous acres that are the property owners' primary residences, not rental or commercial properties, Martin said. Those who run businesses from their homes also must estimate what percentage is used solely for living space.

The county's 7,000 mobile homes, whether on rented or owned land, are eligible to be considered as homesteads, Martin said.

The first mailing will cost the six school districts in Franklin County about $25,000, Martin said. The tax offices' responding letters will cost a similar amount, money that the state will reimburse at a later date, he said.

"The homestead exemption may not get anybody any tax relief for some years to come," Chambersburg Area School District Business Manager Rick Vensel said. Districts must first take action and then the state has to accumulate enough money from slot machines to disburse for tax relief.

To opt into school property tax reform and receive gambling revenues, Vensel said school boards must vote by May 30, 2005, to levy an additional 0.1 percent earned income tax on top of the 0.5 percent they now collect, a 20 percent increase. Vensel said he believes the higher income tax will not be levied until the state accumulates $900 million in gambling revenue to disburse to districts, which could be a couple of years because no slot parlors have opened yet.

School boards then have to hold a referendum in November 2005 or 2007 asking voters to raise earned income or personal income taxes more to "generate sufficient revenue to provide for the maximum allowable tax relief," according to the Pennsylvania School Boards Association's summary of the law.

It is not a genuine option, according to the association, because the law still requires districts to raise the earned income tax by 0.1 percent and use it for property tax reduction, even if voters reject the referendum.

"It's an immensely complicated law" that brings together property tax reform, referenda and funding education through gambling, Vensel said.

"You either accept all three, or reject all three," he said.

The amount of tax relief for each district is unknown, because it will be based on slot revenues and the higher income tax, Vensel said. The state will set a formula for disbursing slot money based on the wealth and tax burden in each district, with the poorer, high real estate tax districts receiving more than wealthier districts with low taxes.

"From one to 501, we're 487th," Vensel said of Chambersburg's ranking.

The amount of tax relief within a district will be based on the median assessed value of all qualifying properties, not the value of each home, Vensel said. Thus, the dollar reduction will be the same whether it is a mansion or a mobile home, he said.

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