Allegheny Institute: Taxpayers seeking elimination of school taxes will be disappointed

The Allegheny Institute for Public Policy recently said that taxpayers hoping to see the end of school taxes due to the use of state gaming funds on homestead and farmstead exemptions for schools will likely be disappointed.

The institute produced an analysis of Act 1 - the Taxpayer Relief Act - that seeks to provide taxpayer relief for the largest part of total property tax bills, and school taxes in particular, and its impact on 41 school districts in Allegheny County. The legislation has governed school property taxes since it was enacted in 2006.

According to the institute, none of the school districts voted for higher wage taxes or personal income taxes in 2007. The plan to utilize gaming money to fund larger homestead exemptions would be used along with a shift in income-based tax, though the institute said only several districts in the state had opted for plan.

"Money from the tax [on slot machine gaming] is used to fund homestead tax relief for school property taxes by lowering the assessed value for a homestead/farmstead," Eric Montarti, a senior policy analyst at the institute, said. "On average, the amount of relief has amounted to about $200 with wide variations district-to-district as the allocations are driven by formula."

The institute said 54 exceptions were granted by the Department of Education, of which 29 resulted in above Act 1-index tax increases, though voters were not given a ballot to vote on the possible school tax increases.

"So does that mean that every homeowner in these districts is paying more in school property taxes now than they did in 2006-07?" Montarti said. "The answer is no."

Montarti said based on millage rates and assessed value, homeowners would have paid more in taxes in 25 districts and less in 16 districts, while other districts fall somewhere in between.

"Certainly, taxpayers hoping to see their school taxes wiped out completely by gaming money are going to be disappointed," Montarti said. "That's likely why we are seeing discussions over statewide or district-based tax shifts proposed in this legislative session. Until that happens, Act 1 will continue to be the governing statute with respect to school property taxes in Allegheny County and elsewhere across the state."