Pennsylvania Gaming Money Funds Tax Cut - Wednesday 28th of June 2006

NANTICOKE, Pennsylvania – Pennsylvania Governor Edward G.Rendell today signed Special Session House Bill 39 (SS HB 39) into law atthe home of Nellie Hughes, which will completely eliminate the Nanticokewoman's property tax burden, as well as property taxes forhundreds-of-thousands of seniors. SS HB 39 delivers the largest propertytax cut in Pennsylvania history - $1 billion annually to all Pennsylvaniahomeowners.

"After 30 years of debate and failed plans, Pennsylvanians like NellieHughes will finally get the tax relief they deserve," said GovernorRendell, who was joined by other Nanticoke homeowners who will also seesignificant property tax relief. "Today is a great day for Pennsylvaniahomeowners, especially seniors who have been driven from their homes asthey attempt to escape the burden of skyrocketing property taxes for fartoo long. Here in Luzerne County, 42 percent of all seniors will get thefull cost of their school property taxes paid for by the state - that isnothing short of remarkable.

"This day is a major victory for Pennsylvanians who have fought fordecades to have their property taxes cut. Every homeowner in Pennsylvaniawill not only get significant reduction, but they will finally get a say infuture tax increases. This bill represents a victory of the possible overpolitics-as-usual."

In addition to guaranteed property tax relief for every homeowner fromgaming revenue, SS HB 39 guarantees Pennsylvania voters will have theoption of reducing their property taxes by at least another $1.4 billion inthe spring of 2007 by voting to shift a portion of their property taxes tolocal income taxes.

SS HB 39 also ensures that more than $250 million of the $1 billionfrom gaming will go to seniors with incomes under $35,000. Nearly 600,000Pennsylvania seniors will benefit from higher state rebates or will beadded to the state rebate program for the first time by increasing themaximum income limit to $35,000 (which excludes half of Social Securityincome) and raising the top rebate to $650. The historic property tax reduction will mean Mrs. Hughes, 88, who haslived in her home for more than 50 years, will receive the top rebate anddrop her property tax bill to $48. Once gaming revenue hits $400 million,the Greater Nanticoke Area School District resident will pay zero propertytax.

"When I traveled across this state as a candidate, I heard from seniorsin every corner of Pennsylvania who shared the dire circumstances they faceand the difficult decisions they must make to keep their homes. Fromputting off purchasing medicine to skipping meals, Pennsylvania's seniorswere falling victims to rising property tax bills. Today, more than 200,000seniors will have that burden lifted completely - and anotherhalf-a-million will finally get tremendous relief.

"This bill will not just benefit seniors, however. When I called aSpecial Session of the Legislature on Property Taxes last September, Iasked that each and every homeowner benefit from gaming proceeds. Bysigning this bill, we guarantee that every Pennsylvania homeowner'sproperty tax bill is reduced, and that taxpayers will have input in theirschool tax bills.

"While our work is never really finished as we work to improve thelives of Pennsylvanians, today we made a tremendous step in the rightdirection."

Governor Rendell said this bill was the product of that special sessionand he thanked House and Senate leaders and members who worked very hard tocraft the bill he signed.

Highlights of SS HB 39

Fast property tax relief. Pennsylvania's senior citizens - who are on fixed incomes and need the most immediate tax relief - will not have to wait for the revenue from gaming to start coming in before they receive tax relief. And, relief for all taxpayers will come sooner because of the requirement that $100 million be held in reserve (The initial reserve was $400 million). This more reasonable reserve level will expedite the delivery of broad-based property tax relief.

No State-imposed income tax shift. A previous requirement to raise the earned income tax (EIT) by one-tenth-of-one-percent in order to qualify for state-funded tax relief is eliminated. Now, every school district will be able to receive tax relief from the state - without any mandate to raise local taxes. SS HB 39 leaves the decision to shift to income taxes up to local voters, with no strings attached.

Greater taxpayer control over future school tax increases in every school district. Beginning this year, taxpayers in every school district will have a greater voice in tax increases. School boards will still be able to raise property taxes each year to keep up with inflation - and even more in many communities - but sensible and fair voter controls mean that taxpayers will now have a direct say in the most extreme tax increases.

More flexible referendum exceptions. The new law wisely expands the exceptions for special education, health care costs and pension obligations. The 10 exceptions that school boards could seek in order to raise taxes faster than inflation because of emergencies or educational necessities are maintained - and they add greater flexibility where school districts need it the most.

New ability to combat high wage taxes: SS HB 39 gives Scranton the power to use up to half of its state allocation from gaming to reduce its wage tax - which is the second highest in the state. The law also maintains Philadelphia's historic wage tax relief, which, when combined with the city's own mandated tax reductions will bring the wage tax below 4 percent for city residents starting in 2009. Because cities with high wage taxes will be unlikely to ever make a shift to increase their earned income taxes to fund property tax relief, senior citizens in Pittsburgh, Philadelphia and Scranton who earn up to $30,000 a year will have their property tax rebate increase by an additional 50 percent.

The Rendell Administration is committed to creating a first-rate publiceducation system, protecting our most vulnerable citizens and continuingeconomic investment to support our communities and businesses.

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