Tyrone Area School District officials are expressing concern over the ramifications of property tax reduction based on gaming revenues.
The tax reduction is part of Act 72 which took effect in early September. The law is tied into the approval of slot machines at racetracks and other venues in Pennsylvania.
Tyrone along with districts throughout the state recently sent out an application for Homestead and Farmstead Exclusions. The form is the first step in the process which is expected to provide tax relief for property owners. However, the reduction in taxes is not automatic.
Tyrone officials explained although the form was mailed by the district; it must be filled out and returned to the county tax assessment office in the county in which the property is located. The Tyrone district is comprised of three different counties; Blair, Huntingdon and Centre. The form must then be approved by the respective county tax assessment office.
The district must also take other action through school board approval for the tax reduction to take effect. The state must also release funds. According district business administrator Cathy Peachey, that won’t happen until at least 2006 and only when money in the state coffers from slots reach at least $900,000.
“In order to avail ourselves of the gambling money, we have to impose a point-one-percent Earned Income Tax (increase) and the school board must make that decision by May 30, 2005.”
In the Tyrone Area School District, this would increase the EIT from 1.15 percent to 1.40 percent except for Tyrone Borough residents; the increase there would raise the EIT from 1.4 to 1.5 percent.
“The gambling money will be added to the point-one-percent to make available the dollars for the Homestead Exclusions,” said Peachey. “It’s important for residents to know credit will be given in the form of a reduction in the assessed value of their property. It will not be a reimbursement or rebate check. It’s going to show up on their tax bills.
“It won’t be immediate-2006 at the earliest” said Peachey. “I guess a perception a lot of taxpayers may have is ‘I fill out this application and I’m going to get a refund check on taxes already paid’ or ‘I’m going to get a reduction on next year’-and that in all likelihood is not the case-because we really don’t anticipate this happening until 2006.
“(We) wanted to clarify (these issues),” said Peachey. “It’s very confusing-we’re still trying to work through the intricacies. We do not know what the reduction will be, it is based on the gambling revenues and the number who apply for the Homestead. The average median assessed value will drive how much the reduction will be.
“If small numbers apply, the figure will be different than if everyone who qualifies applies. The (respective) county has to certify, based on applications received, what the median assessed value is-Tyrone includes parts of three counties-which makes it a little more cumbersome.”
The deadline to submit the Homestead/Farmstead application is March 1, 2005. According to information provided by the Tyrone Area School District, those submitting applications will receive notification of approval or denial from the county assessor within 30 days after the receipt of the application. If the application is denied there will be an opportunity to appeal.
All owner-occupied properties are eligible for a homestead/farmstead exclusion.
As part of the program, a district must also ask voters if they would like to further reduce their property taxes by further increasing the local EIT or through the levying of a personal income tax. The “front-end” referenda may take place in November of 2005 or November of 2007, according to information provided to by the TASD.
A school board can chose do nothing and would get nothing from the state gaming revenues or a board can pass a resolution by May 30, 2005 to “opt in” to the program. In addition to imposing the point-one-percent increase in the EIT, districts which “opt in” will still be faced with options regarding taxes which require voter approval.
