By MARC LEVY Associated Press Writer
© 2008 The Associated Press
HARRISBURG, Pa. — Most homeowners in Pennsylvania could get an average $169 reduction on their next school property tax bill as the state begins to distribute its take from slot-machine gambling in casinos.
The size of that reduction adds up to an average cut of 10 percent off school property taxes for eligible home and farm owners outside Philadelphia in the 2008-09 school year, state officials said Tuesday.
In Philadelphia, residents will see a 5.7 percent reduction in the city's wage tax rate in 2009, while suburbanites who work in the city will see a 5 percent drop in the wage tax rate they pay.
Slot machines were legalized in 2004 on the promise of tax cuts, and revenues helped expand a property tax and rent rebate program last year for low-income seniors. The tax cuts will be the first after much anticipation by homeowners, as well as gambling opponents and proponents.
"It took us a while to get here, but we are finally here," said Michael Masch, the budget secretary for Gov. Ed Rendell.
The number of taxpayers eligible for a reduction, and the number of people who will actually receive a reduction, was not immediately clear.
The Rendell administration said Tuesday that, based on Census estimates, there are 3.1 million home and farm owners outside Philadelphia who would be eligible.
To receive a reduction, home and farm owners outside Philadelphia must have completed and returned an application sent by the county. The number of people who did so will not be known until May, Education Department spokesman Michael Race said.
In addition, the city of Philadelphia does not have an exact figure for how many people pay the city's wage tax, although the Pennsylvania Intergovernmental Cooperation Authority estimated that it is more than 900,000, based on partial city figures.
Regardless, some will benefit more than others.
Based on a formula developed by the Legislature and the governor's office, the slots money will be weighted toward homeowners in school districts where property taxes are relatively high and incomes and property values are low.
Also, low-income elderly homeowners and suburban homeowners who work in Philadelphia will get help two different ways, making them likely to see bigger average tax bill reductions.
Pennsylvanians won't be the only ones to benefit. People who work in Philadelphia and live in New Jersey, Delaware and other states also will get the benefit of the lower city wage tax.
To date, the state has collected $905 million from slot machines to reduce taxes since the first slot machine lit up at Mohegan Sun at Pocono Downs in November 2006.
Based on the amount of slots revenue expected by Oct. 15, the state will distribute $612 million for the tax cuts and another $48.5 million from slots revenue for the property tax and rent rebate program for low-income seniors, while keeping about $273 million in reserve.
Nearly $87 million will be set aside to cut Philadelphia's wage tax rate in 2009. The resident rate will decline to 3.93 percent from 4.169 percent and the nonresident rate will decline to 3.5 percent from 3.685 percent.
Masch said he decided to keep some extra money in reserve, beyond the $100 million that is mandated, to ensure that the size of the next year's tax cuts are at least the same as this year's. After that, more slot-machine casinos are expected to open, boosting revenues until they are expected to provide $1 billion in tax cuts in 2012, Masch said.
Seven slots casinos are now operating in Pennsylvania. Four more slots casinos, including two in Philadelphia, are licensed but have yet to open, while state gambling regulators have not issued three licenses, including two resort licenses that allow a relatively small number of slot machines on site.
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