On April 15, 2011, Pennsylvania Budget Secretary, Charles Zogby, certified that $776.2 million in gaming revenue will be available for relief of Pennsylvania property taxes in 2011. All Pennsylvania residents that own their primary residence are entitled to benefit from this property tax reduction.
This translates into approximately $200 of property tax relief for each Pennsylvania homeowner. The exact amount of property tax relief will vary by school district, and will be posted on the Pennsylvania Department of Education’s website in early May.
Even though Pennsylvania is projected to surpass Atlantic City in the next year to become the number two gaming market in the United States behind Nevada, property tax relief funds have remained stagnant since their inception. The funds have never reached the $1 billion level touted by former Governor Ed Rendell while supporting Act 71 of 2004, which legalized slots gambling in Pennsylvania.
Local property taxes, on the other hand, have skyrocketed since 2004, far outweighing any benefits of the property tax relief provided by casino gaming. In addition, the loss of federal stimulus money and the proposed cuts to the state education budget mean that many school districts will be seeking to raise property taxes even higher next year.
Even though Pennsylvania law (Act 1 of 2006) requires that any local property tax increases over an indexed amount (1.6% on average) must be approved by voter referendum, several exceptions in the law allow school districts to get approval from the PA Department of Education (PDE) to raise taxes above the index without voter approval. In the five years since Act 1’s adoption, virtually none of these exceptions have been denied by PDE.
In order to address this, the Pennsylvania Senate is currently considering legislation removing the exceptions to the referendum requirement for property tax increases above the Act 1 index. It is part of an 18 bill package known as the “Mandate Relief/Taxpayer Protection Package.” Another bill in the package requires a two-thirds majority vote by a local school board in order to increase property taxes.
In order to receive the property tax rebate that all Pennsylvania homeowners are entitled to, you must fill out a confusingly worded form that your local school district may or may not mail to you. Luckily, as part of a special report entitled Property Tax Relief in Pennsylvania: Homeowners Need More Help, Less Hype, Auditor General Jack Wagner provided resources for applying for the property tax relief that you are entitled to. Click here for more information and resources on Property Tax Relief.
For further information, please contact Marty DiGiovine.
Visit our webpage if you'd like more information on Schneider Downs Tax Advisory Group.
Schneider Downs provides accounting, tax, wealth management, technology and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA and Columbus, OH.
This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.