Crowd of 150 hears highs and lows of tax reform bill

March 11, 2005|by RICHARD F. BELISLE

GREENCASTLE, Pa. - Act 72, a "complicated and controversial" tax reform bill aimed at cutting real estate taxes by raising state income taxes, was explained Thursday night to about 150 residents of the Greencastle-Antrim School District.

Pamela M. Price, director of board development for the Pennsylvania School Boards Association, spoke in the elementary school gymnasium.

Schools Superintendent P. Duff Rearick said the Pennsylvania General Assembly passed Act 72 to try to "fix a real problem. School boards rely on real estate taxes, but that puts a real burden on people and the Legislature knows that. They've come up with this convoluted law that no one understands."

Arnie Jansen, a school board member, said the presentation "left many heads spinning. I'm just a simple guy. Act 72 doesn't produce revenue for students, it just shifts property taxes to earned income taxes."


Under the new law, money raised through legalized gambling - such as slot machines - would only be used to shift the tax burden from real estate to the earned income tax that everyone pays or to personal income tax, which taxes dividends, interest and capital gains, among others.

Act 72 would raise the current earned income tax rate of 1 percent by 0.1 percent. Additionally, any money the state makes off slot machines would go to the state's 501 school districts under a complicated funding formula, for property tax relief.

Price estimated that Greencastle's share from the income tax increase and its share from the slot machines would come to about $773,000 a year for property tax reduction.

The slot machine money won't become available to the school districts until the state collects $900 million.

Even then, Price said, only $500 million will be available since $400 million will be held in reserve.

Resident Anne Larew said that lawmakers are trying to pass the responsibility for property tax reform onto school districts instead of local and county governments.

"A lot of people want property tax relief and the Legislature knows it. This has nothing to do with the instruction and education of children," she said to a big round of applause from the audience.

Among winners under Act 72 are retired homeowners with Homestead Exclusions or those who have little or no earned income, and low-income residents who pay little if any income tax. Farmers also would make out because of their Farmstead Exclusions, Price said.

Losers would be renters who don't pay real estate taxes. Their income taxes would go up. Two-income families also would lose along with the business community, Price said.

The act puts more control over school taxes in the hands of voters at referendum.

School boards have until May 30 to decide if they want to opt in or out of Act 72.

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