Tax reform leader David Baldinger is hit with the same question as he travels across Pennsylvania lobbying for change: What happened to gambling relief for school taxes?
“They’re infuriated by it. I see it in online newspaper comments and hear it all the time,” said David Baldinger, spokesman of the Pennsylvania Coalition of Taxpayers Associations, an alliance of 81 nonpartisan organizations representing tens of thousands of taxpayers.
“It has taken people five years to understand that there is no relief from gambling. They realize their school tax bills keep going up,” said Baldinger, who is advocating legislation replacing school real estate taxes with revenue from an increased and expanded sales tax and earned income tax.
Former Gov. Ed Rendell and other state officials promised property owners they would receive significant school property tax reductions through legalizing casinos, Baldinger said. He recalled a Rendell estimate of at least 50 percent tax savings.
In reality, gambling-funded tax reductions have remained about the same for property owners in Luzerne County’s 11 school districts since breaks were first granted in the 2008-09 school year, according to publicly posted state estimates on the breaks.
The reductions, automatically deducted from the amount owed, ranged from a low of $52 to $54 in the Dallas School District to a high of $210 to $213 in the Wilkes-Barre Area School District from the 2008-09 to 2013-14 school years, state records show.
The ranges of annual gambling breaks in other county school districts during this period, according to state records:
• Crestwood, $64-$76;
• Wyoming Area, $83-85;
• Lake-Lehman, $97-$100;
• Pittston Area, $105-107;
• Hazleton Area, $135-$154;
• Greater Nanticoke Area, $145-$147;
• Wyoming Valley West, $145-$147;
• Northwest Area, $167-$172;
• Hanover Area, $201-$208.
School taxes are $1,552 on a $100,000 property in the Wilkes-Barre Area School District, which means a gambling break of $213 would knock off almost 14 percent of the total bill.
The state education department uses a formula based largely on enrollment, personal income and property market values to determine allotments for each district.
School districts then divide their allocation by the number of owner-occupied homes and farms signed up for the break.
A combined $11.79 million in gambling money was awarded to 87,214 eligible properties in the 11 school districts for the 2013-14 school year.
State officials had predicted the amount in the tax relief fund and thus the breaks would increase over the years as more gaming facilities opened, but the allocations to county school districts has stayed relatively flat around $11.7 million since 2008-09, records show.
Statewide, the allocation for gambling relief was $611.6 million this year, compared to $616.5 million in 2010-11, records show.
Baldinger, of Berks County, believes state officials exaggerated promises about the gambling breaks to “legitimize slots.”
“Property tax relief was thrown in as a sweetener. They added some sugar to make people happier about it,” he said.
He doesn’t foresee increases in the amount of the break and believes it will decrease. Pennsylvania casinos took business from Atlantic City casinos, and he expects new casinos in Maryland, Ohio and New York to do the same to Pennsylvania.
“There’s only a finite amount of money available for gambling, so I don’t think we will ever see an increase in what Pennsylvania is getting now,” he said.
Many Pennsylvania property owners also had no clue gambling legislation took money off the top for administrative expenses, capital projects in municipalities, a compulsive gambling treatment fund, a new arena for the Pittsburgh Penguins hockey team and other expenses, he said.
“Then, if anything is left, it accumulates for property tax relief for the rest of Pennsylvania taxpayers,” Baldinger said.
Legislators have maintained these other expenses are worthwhile and fund many community projects that would otherwise be covered by property taxes.
Slot machine revenue has funded millions of dollars in projects throughout Luzerne County to date, including work on municipal buildings, recycling centers, a public library and infrastructure.
Baldinger said the gambling tax breaks cover only a fraction of most school tax bills, and the benefit diminishes when the breaks stay flat as taxes rise.
“Whatever you get now is just offsetting increases,” he said.
County property owners signed up for the gambling break also receive a reduction in county taxes that has nothing to do with gambling.
Implemented as part of the 2009 countywide reassessment, the county break exempts $10,000 in assessed value from county taxation on primary residences. The break will save each participating property owner $57 on county taxes this year.
Former county controller Walter Mitchell recently proposed canceling the break to save the county at least $4.5 million. Some council members say they’d be willing to review the pros and cons of the break in the future, but none supported halting it this year.