From the Clarion News, writer Amy Thompson reports “The Homeowners Tax Relief Act, which is partially based on gambling revenue, is looking more and more of a gamble to Clarion County superintendents and school board members than a slot machine loaded with quarters.” She goes on to quote the Allegheny-Clarion Valley superintendent saying “We’re gambling on gambling.”

The LWVPA opposed Act 72 and its combination of poor policies (mandates of earned income taxes, costly referenda procedures for policy decisions including but not restricted to increases in school district budgets, and reduction of property taxes but without regard for adequate and equitable funding for education) and now as school districts are analyzing and agonizing over whether to “opt in” or “opt out”, articles such as the one quoted above are appearing in local newspapers. This decision, which appears to be final, must be made by May 30. Opting in requires the school district to impose an additional or new one tenth of one percent earned income tax (EIT) unless a referendum determines a community preference for personal income tax ( PIT). This additional revenue must be used to reduce property taxes and not for academic programs and must be revenue neutral. If the district opts in, it becomes subject to the referendum provisions if it seeks to raise taxes over a rate fixed each year by the state. The need to put a budget referendum, if required, on a primary ballot pushes the budget process back into January when very little is known about state funding prospects for the next school year or even all the needs of the coming year.

If and when money is received from gambling, that money also is to reduce property taxes, using the Homestead Act, (Act 50) model. Eligible property owners in a district will receive the same reduction, based on the median assessed property value in the district and the aid ratio. This will appear as a reduction in their tax bill.

Because of the requirement to raise income taxes and the fact that the reimbursement from any gambling revenues is based on the district’s aid ratio, participation creates “winners and losers” (well it is gambling legislation.) Wealthier districts are discovering that their constituents may be “losers” under this system and may opt out. Will this then help the less affluent districts? This is uncertain.

League members have been asking for direction. We opposed the provisions when we could, but Act 72 is a law. This law provides no new money for instruction. It does nothing to improve the notorious disparities in resources between richer and poorer districts. It is property tax reduction funded by income tax increases and a portion of presumed adequate gambling revenues. (We opposed Act 71 which provides for slot machines in PA and we are plaintiffs in a suit asking for it to be overturned on procedural violations.)

Because of the complexity of the details, and because the impact on each school district is different, we recommend encouraging and cosponsoring town meetings led by school district officials to explain the ramifications to the taxpayers. We also recommend the following web sites for further information.

PSBA (PA School Boards Assn.) website http://www.psba.org/issues-research/act72index.asp or the PDE (PA Dept of Education) website http://www.pde.state.pa.us/proptax/site/default.asp

On the PDE website, you will find a FAQ section, a timeline and estimate of the property tax reduction in your school district. There will be a Spring Voter article on Act 72.