TAX NEWS - 2010

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Pennsylvania Tax: Slots provide less property tax relief each year

When property tax relief from slots revenue first began in 2008, York County taxpayers got an average of $176 off their property tax bill.

But that was just the beginning, state officials said at the time, as slots casinos were new and more were expected to open. That would mean more revenue to fund much more property tax relief.

The governor's office put out rosy projections for future years, counting on slots revenue for tax relief to grow from about $600 million the first year to $750 million soon after, and eventually $1 billion-plus.

Those projections have yet to become reality.

The average York County property tax relief expected for the upcoming school year: About $168, less than when the program started.

That's also less than the tax increases in eight York County school districts since the program started.

"I think it's done a lousy job for most Pennsylvanians," said state Rep. Stan Saylor, R-Windsor Twp. "It's not relief for anybody."

The Pennsylvania Gaming Control Board, which oversees slots gambling, now hesitates to even call it "relief."

"I think there were individuals who looked at the term 'relief' and thought they'd be absolved of property taxes. It was always going to be a 'reduction,'" said spokesman Doug Harbach.

The reality: Now in its third year, here is the reality of property tax relief, using the latest state-supplied property tax relief figures and the final or proposed 2010-11 budgets for local school districts.

The average York County school district's tax relief per homestead has gone down each year since 2008. A homestead is a person's primary residence, and is the main qualification to get the tax relief. Hundreds more homesteads have registered since the program began, meaning more hands are going into the pot.

The average York County school district has seen property tax increases outpace the property tax relief, meaning any relief homeowners initially experienced has been outpaced by tax increases, for the most part.

Take the York City School District out of the equation -- the district's poverty means much more tax relief -- and the numbers look even worse. The average property tax relief in all of York County since the program started has been about $170 per year per homestead. Subtract York City and the rest of the county is averaging about $150 in relief per homestead.

Yet, overall property taxes have gone up, on average, about $170 in non-York City school districts since 2008.

Three years in, the state's total slots revenue for property tax relief in the 2010-11 school year is about $617 million, just $4 million more than when it began.

Homeowners were told in 2008 they would be guaranteed a minimum of 10 percent and up to 40 percent tax relief when the annual revenue from the fund hits $750 million, but that reduction hasn't come close to fruition, save for some urban districts.

That all means the program's funding stream hasn't kept up with increasing demand, so that as more people are signing up, the amount handed out per homestead has gone slightly down. And that money is much less than projected when the state initially proposed slots as a means of providing property tax relief.

"It was giving false hope," said state Sen. Jeffrey Piccola, who represents part of northern York County. "The districts are getting the same amount of money, and the property taxes continue to go up ... It was never going to provide long-term relief."

The Gaming Control Board's Harbach doesn't argue that point. With property taxes constantly increasing, the reduction mostly "lessens the impact of the increases," he said.

The governor's office says the program has "been a success in doing what it is designed to do," according to spokesman Gary Tuma.

Although property tax increases have largely negated the relief, Tuma said "at least the slots-funded property tax money lessens those increases."

More money coming? But Harbach and Tuma also point out that more slots revenue is on the way.

A major hitch in the plan since slots casinos were first authorized is some casinos were slow to open, and five of the 14 planned casinos haven't opened or been approved yet.

"If we had all 14 casinos up and running, we'd reach that $1 billion goal" of revenue for tax relief, Tuma said. "We are well on our way to our goal. ... We are all a little disappointed that things haven't happened a little more quickly."

A major casino in Philadelphia is expected to open in September and should bring in $100 million or more in annual revenue itself, Harbach said, followed by another small casino in Valley Forge next year and possibly another one in Philadelphia, among others.

That should help push the state's overall slots revenue designated for property tax relief closer to the $1 billion mark Gov. Ed Rendell first touted. About one-third of slots revenue goes to other uses such as supporting the horse racing industry and building stadiums.

Harbach said the property tax relief program may have initially been "oversold," a word also used by state Sen. Pat Vance.

"Perhaps it was oversold in the beginning," said Vance, who represents a portion of northern York County. "I can't make a carte blanche statement and say it's been a failure, because it hasn't been a failure everywhere. But it's not as equitable as I'd like it ... For the areas I represent, it's not good at all."

Taxpayers' views: George Ioos, a member of the Dallastown Taxpayers Coalition and a York Township resident, said the underlying property tax issue is inequitable state funding, but he still believes lawmakers sold taxpayers on what eventually was a "pittance of relief."

"We, the taxpayers, were sold on the fact we'd get property tax relief. In our mind, we assumed that was going to be significant or at least meaningful. Quite obviously, in the politicians' mind, that never occurred to them," Ioos said.

Stewartstown resident Margaret Lavin isn't even sure it should be called a "property tax relief program."

"It's not a relief when you're looking at thousands of dollars," in property taxes and only a hundred or so dollars in relief, Lavin said.

Lavin is an officer in the South Eastern Taxpayers Council, which supports overhauling the education funding system in favor of shifting the burden away from property taxes.

That, she said, would accomplish much more than relying on slots revenue.

Broken promises: Saylor shares Lavin's sentiment, but bills he has co-sponsored to shift the burden for funding schools from property taxes to other revenue streams have stalled in the House.

And that makes him all the more frustrated the slots revenue hasn't provided more relief.

"They haven't delivered what they've promised it was going to deliver," Saylor said of Rendell and the state gaming control board.

Saylor said his property taxes have gone up about $250 a year in Red Lion in recent years, but the average tax relief is only about $185 there.

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