With the idea of replacing property tax with sales tax stalled, lawmakers in the state Senate are mulling more modest reforms, including property tax freezes for senior citizens.
While almost half the state Senate has signed onto a bill creating the freeze, there is no explanation for how the state would pay for it. Most of the attention is focusing on expanded gaming.
A state analysis found that 9 percent of property taxes in Pennsylvania come from homes of people 70-or-older. And the nature of a tax freeze is that the hole it leaves in the budget escalates rapidly. The state Independent Fiscal Office estimated last week that within four years, the state would need to come up with $200 million to cover the cost of the shortfall created by the freeze.
One possibility would be to use new money from adding keno. In its bid to privative the state-run Lottery, the Corbett Administration had estimated that allowing Camelot Global Services to run keno games would generate $200 million.
Another would be to use the revenue from allowing taverns to offer the same small games of chance popular in social clubs and veterans clubs. A legislative analysis suggested that plan would generate $150 million in new tax revenue for the state.
“There’s no leading candidate so to speak” in Senate majority leader Dominic Pileggi’s view, his spokesman Erik Arneson said. “That’s a discussion the governor and the General Assembly need to have.”
Senators on both sides of the aisle describe the property tax-freeze as a reasonable solution, benefiting the segment of the community most affected by school tax increases.
“Everywhere you go, seniors are complaining that they can’t afford their property taxes,” said Sen. Elder Vogel, R-Lawrence County. “And it’s a fact.”
But until someone figures out how to pay for it, the plan’s not going anywhere.
“You have to pay the piper,” said Sen. John Wozniak, D-Cambria County.
The state can’t expect school districts to absorb the loss in revenue from a tax freeze for seniors, said Sen. Gene Yaw, R-Lycoming County.
Reimbursing the local school districts would leave a $50 million hole in the budget in the first year, the state’s Independent Fiscal Office found.
Slots revenue already provides property tax rebates for seniors and homeowners. The rebate program’s shortfall is that the state’s kickback to homeowners has not been able to keep pace with local school property tax increases, Yaw said.
A survey of rural districts shows the property tax rebates provided by slots revenue ranges from $61 to $233 a year per home.
In addition, the Lottery money provides rebates for seniors that range from $250 to $650, depending on income.
The average school property tax bill in Pennsylvania is $2,700 a year, according to state estimates.