A meeting which was open to the general public was held Thursday night in Altoona to give an overview of Act 72, the state’s property tax reduction law.
The program is to be funding by expected revenues from slot machines in the state which were approved last summer by the legislature.
A Penn State professor, Dr. William Hartman, a school finance expert, addressed a group of about 60 people at Altoona’s Roosevelt Junior High Auditorium. The majority of those in attendance were local school board members and officials.
One of those in attendance was Tyrone Area School Superintendent Dr. William N. Miller. He said he didn’t think there were more than 15 people from the general public in attendance. The forum had been organized by eight area school districts including Tyrone Area and Bellwood-Antis. Dr. Hartman was hired by the districts to help them sort through the complexities of the tax reduction legislation. A previous presentation had already been given by Hartman to school officials in a closed session.
Hartman said the biggest “winners” from the property tax reduction act will be those on fixed incomes such as seniors or those with low income and farmers. Those who own farm property and a residence will be able to receive two reductions, one for their house and one for farm property. He said the biggest “losers” are renters and commercial owners who get no benefits from the program and higher income homeowners. He also said other “losers” include school district decision makers who are in the position of making budget moves long before they normally do while not having all the information they need. School districts across the state are facing a May 30 deadline to either “opt in” or out of the program. If they don’t “opt in” they will be barred from ever participating in the program in the future.
School districts have asked for a one-year extension to delay having to make a decision, a proposal which Governor Rendell said he would sign if passed by the state’s lawmakers.
The state is also facing legal proceedings regarding the legality of the law (Act 71) which authorized slots in the state. It’s possible districts could face the possibility of “opting in” to the tax reduction program only to see the source of its revenue, the slots funding, overturned in court.
Hartman also said those who gamble will be “losers” in the process. He showed a graph which explained how much (on average) each adult in Pennsylvania would have to lose at the slot machines after paying out the winners to generate expected revenues to fund the property tax reduction. He indicated it’s obvious that not everyone gambles, even mentioning himself as one who would not be playing the machines. In other words, those that do gamble would have an additional burden.
In addition to the gambling revenues, the program is also being funded by an increase in the earned income tax of one-tenth of one percent. That increase will be added to the one-half of one percent already levied by the school districts.
By “opting in” to the property tax reduction by May 30, the increase in the earned income tax won’t take effect until the slots money starts to roll in at levels sufficient to fund the reduction. The first slots aren’t expected to spin until sometime in 2006 with revenues for the tax reduction not benefiting property owners until 2007 or 2008.
Homeowners had the opportunity to submit a form for a Homestead or Farmstead exclusion to receive the reduction. The deadline for the return of the forms was March 1. Taxpayers who didn’t submit the form are expected to have another chance to do so.
As part of Act 72, districts will be required to have a “front-end” referendum in November of this year to lower real estate taxes by raising the EIT.
If voters turn it down, districts which decided to “opt in” will be able to raise the EIT by the one-tenth of one percent. Also, barring the use of several exceptions, districts would have to offer voters a “back-end” referendum if a proposed tax increase exceeds a inflation-based index.
Thursday night, Hartman said that to date only four out of the state’s 501 school districts have decided to “opt in” to the program.
Earlier this week, Governor Ed Rendell held a video conference to answer questions for school board members and school districts about the tax reduction.
Superintendent Miller had previously raised concerns the legislation did not address how districts which are comprised of more than one county would deal with equalizing taxes for the homeowners and still apply aspects of the law governing the property tax reduction.
The district had previously stated it would be against “opting in” if the inflation index had to be applied before taxes were equalized.
Miller said a proposal to deal with the equalization issue is being looked at by the state which was generated by the Pennsylvania Association School Business Officials. He indicated he thought the issue would be dealt with in a way that was acceptable to the district. Miller said if it is, then the equalizing of the millage would be done before the inflation index is applied.
“Assuming they will follow through in that manner (on the equalization issue), I think it puts us in a situation, and I’m not speaking for the board, I think from my perspective, we’d have to take a serious look at it (opting in),” said Miller.
He cited the “demographics’ in the district; seniors and those on fixed incomes who would benefit most from the property tax reduction as to why he felt the district should consider opting for the program.
“I don’t like the politics, the pressure that was put on us,” said Miller. “That if you don’t do this, if you don’t opt in, then we are going to get you some other way. That’s the clear message that’s been delivered to us on numerous occasions. The legislature and the governor should have looked at it a little differently. If they wanted it, they should have taken action and said this is what we are going to do rather than throwing ‘the politics’ back on us and if you don’t conform you are going to have a worse situation to deal with, that I don’t particularly care for.”
Miller said the school board is still undecided. He said he along with business administrator Cathy Peachey and six school board members attended the presentation in Altoona on Thursday.
Peachey has prepared an article about Act 72 in the district’s latest editions of “Ty Notes” which appears as an insert in The Daily Herald. The article includes Peachey’s contact information for those in the general public who may have further questions.
