Governor Rendell Says Seniors May Finally Get Property Tax Relief; All Homeowners Guaranteed Reduction

Urges General Assembly to Consider the Bill This week

HARRISBURG, Pa., May 1 /PRNewswire/ -- Governor Edward G. Rendell said today Pennsylvania seniors may finally get significant property tax relief when House Bill 39 is passed by the state legislature. The Governor congratulated legislative conferees for reporting out a solid bill that represents a historic compromise and the largest property tax relief package in Pennsylvania history.

"Today is a great day for all Pennsylvanians but particularly for our seniors," said Governor Rendell. "Property tax relief is finally on the way. The bill approved today in Committee will give unprecedented tax relief to those who need it most, our seniors living on fixed incomes. I urge a vote by the full General Assembly this week on the package which is supported by all four caucuses.

"This plan adds 411,000 seniors to the state's existing tax relief program. These citizens will get checks of up to $650 delivered into their hands, reducing the impact of the property tax they receive this year. Although the money will not go out until next year this plan guarantees our seniors the help they have deserved for so long. All told, Pennsylvania seniors will get more than $250 million of long awaited tax relief.

"Relief will go to communities large and small," said Governor Rendell. "In Allegheny County another 39,000 senior taxpayers will get relief. In Jefferson County new relief will go to more than 2000 seniors. Every community is automatically enrolled in the tax relief program.

"And this is just the beginning. Once money from gaming is flowing into state treasury every Pennsylvania homeowner will be guaranteed tax relief in addition to the funds going directly to seniors. In most of the state this will come in the form of lower property taxes.

"Since low income renters often pay hefty rents because rising property tax costs are passed on by landlords, the plan will help 10,000 senior citizen renters defray these costs.

"This plan will assure that maximum relief goes to communities with the highest property taxes and least ability to pay those taxes. Gaming will likely bring in as much as $1 billion per year when fully phased in, and this money will allow us to provide the largest property tax cut in Pennsylvania history.

"We are also reforming how school taxes are set. This bill ensures tax rates are fair and gives the voters a voice in large tax increases. In addition, it enables school districts to decrease their reliance on property taxes and shift to a fairer tax base -- a local income tax."

The conference committee unanimously reported out House Bill 39 which does the following:

* Seniors Citizens with incomes up to $35,000 a year will get a property
tax rebate for FY 2006/07 school taxes. In addition currently eligible
seniors are likely to get more assistance due to the increase in the
rebate payments -- the maximum is increased from $500 to $650.

* Seniors who after state funded property tax relief must pay at least 15%
of the income toward property taxes will get a 50% higher rebate. For
some seniors who have income of less than $30,000 this could mean a
rebate as large as $975.

* All homeowners will see their property taxes reduced when state gaming
funds become available. The first year of this reduction is anticipated
to be 2008-09 when a minimum of $400 million will be distributed to
lower property taxes.

* In addition to funding all homeowner property tax relief, the gaming
funds will also reimburse the lottery for advancing the first year of
funds for the 2006-07 expanded property tax and rent rebates.

* The tax payer control provisions are the same as passed by the
legislature two years ago, however greater flexibility was given to the
districts with respect to tax increases that are needed to pay for
rising special education costs, pension obligations and the law updates
the base year for the calculation of school costs to enable the
inclusion of costs for school health benefit in contracts as of Jan.
2006.

* All districts that opted into Act 72 are relieved of their requirement
to impose a tenth of a point EIT this year and they are permitted to
take advantage of the more flexible exceptions. All districts that did
not opt in to Act 72 must develop their budgets in accordance with the
backend referenda exceptions and seek the court's approval of tax
increases that exceed the allowable index and that are not due to
allowable exceptions.

* All districts must give the voters the option to reduce property taxes
further by shifting more of their local school tax base to an EIT or a
PIT. Voters must go to the polls and vote on this shift in 2007 and may
make a further voter approved shift to income taxes in 2009. This
provision does not apply to Pittsburgh, Scranton and Philadelphia --
which already have particularly high wage taxes.

* In Philadelphia and Scranton where the local income tax rate is higher
than other communities the state funded tax relief will go to lower wage
taxes. In the case of Philadelphia, 100% of the funds are used for this
purpose and in Scranton 50% of the funds are dedicated to reduce wage
taxes.

* Because seniors in Philadelphia, Scranton and Pittsburgh have such high
taxes and their communities cannot lower property taxes by increasing
their income taxes even higher in 2007, extra relief property tax relief
is directed to those senior citizens equivalent to 50% of their property
tax rebate.

* Districts choosing not to accept gaming funds for property tax relief
will need voter approval to reject these funds. In this case all other
provisions of this bill remain in effect for the district.

The Rendell Administration is committed to creating a first-rate public education system, protecting our most vulnerable citizens and continuing economic investment to support our communities and businesses. To find out more about Governor Rendell's initiatives and to sign up for his weekly newsletter, visit his Web site at: http://www.governor.state.pa.us/.