WESTERM PENNSYLVANIA Policy analysts estimate property-tax cut from slots

Money from gambling wouldn't eliminate the property tax.
By HAROLD GWIN
VINDICATOR SHARON BUREAU
SHARON, Pa. -- Legalizing slot machines and using tax revenue they generate to cut school district property taxes could save Mercer and Lawrence County taxpayers between $135 and $460 a year.
The exact amount would depend on how much revenue the slots generate, but that's the estimate prepared by the Pennsylvania Economy League, using House bill 113 passed last year as the basis for its figures.
That bill hasn't become law and the league has cautioned that its numbers could be altered by new legislation.
Debate in Harrisburg
The slots issue is being debated in Harrisburg now, and legislative leaders have indicated it could come up for a vote in April.
Gov. Ed Rendell wants slots at eight racetracks and four other casino locations.
He's predicted that the slots could generate more than $1 billion a year in taxes that could be channeled into school property tax relief.
Others have said that $600 million is a more likely figure, and opponents of the plan have warned that there won't be enough revenue to eliminate the school property tax.
LeeAnne Rogers, an analyst with the Pennsylvania Economy League, a statewide nonprofit organization created to help local governments develop cost-effective operations and make informed policy decisions, said her agency developed projections under both scenarios.
Under H.B. 113, school districts would have to agree to raise their wage tax from the current 0.5 percent to 0.6 percent to secure a share of the slot machine money and further reduce the property tax burden. That would put more of a tax burden on working people.
However, property owners would likely see all or more of the wage tax increase offset by a reduction in their property taxes. H.B. 113 puts a 60-percent tax reduction cap on school property taxes.
Homeowners would have to apply for a homestead exemption to get the tax break. Renters wouldn't get any tax break but would see their wage tax rise by 0.1 percent.
Under terms of H.B. 113, every property taxpayer in any given school district would get the exact same tax reduction, Rogers said.
Figuring the tax reduction for each district involves use of a complicated formula to determine its Property Tax Reduction Index. That's the figure the state would use to allocate gambling money to each district. The higher the index number, the more money a district would receive.
Factors in formula
The formula takes into account a variety of factors, including the district's local tax effort, the market value of all property in the district, the personal income of people living in the district and the pupil population.
A district with high taxes might have a lower Property Tax Reduction Index than a neighboring district with lower taxes but also less wealth per pupil. Under that scenario, the poorer district would get a higher percentage of tax reduction.