Published Thursday, March 25, 1999 The GOP, which controls both legislative chambers, plans to expand one of the major Lottery-funded programs -- property tax and rent rebates -- so an additional 181,000 low-income senior citizens, including 1,950 in Mercer County, can qualify for this benefit when the state budget is voted on next month.
Under the proposal, the average rebate paid out by the program would increase by $100.
The announcement by House Majority Leader John Perzel, R-Philadelphia and Senate Majority Leader Joseph Loeper, R-Delaware, signals strong rank-and-file support for the proposal. This makes it likely that low-income seniors who earn $15,000 annually or less will be early beneficiaries of long-term efforts to reduce the burden of local property taxes, particularly those levied by public schools. The school property tax is the largest tax bill many Pennsylvanians pay.
On the other hand, House Democrats who are a minority say they will continue to push for an across-the-board property tax cut for taxpayers of all ages. They want to earmark state aid to schools to use for tax cuts.
In the short term, the rival tax relief proposals offered by the two parties will affect how a sizable portion of the state budget surplus -- currently estimated at $250 million, but growing -- will be spent. The price tag for the GOP proposal is $96 million. But the outcome of this budget debate has long-term political consequences as well.
Both parties are positioning for advantage on the property tax issue, which has been festering for a decade, says Dr. Michael Young, a political science professor at Penn State-Harrisburg.
"Taxes are a gut level issue," says Young. "Given the slimness of the margin of control in the House, I think the parties are nervous about the impact of the tax cut issue on the electorate in what could turn out to be a tight election in 2000."
As Pennsylvania's population ages and more people find themselves living on fixed incomes, Young said rising property taxes are a demographic time bomb.
The passage of last year's local tax reform law carries the potential for voter disenchantment, he added. Thousands of people have filed homestead tax exemption applications in recent weeks, but it's uncertain whether local school boards will take the steps needed to implement this exemption, which would reduce tax assessments on qualifying primary residences.
The GOP proposal is aimed at providing some quick relief to low-income seniors aged 65 and over, low-income widows and widowers aged 50 and over and permanently disabled people aged 18 and over who now use the rebate program. Many seniors have been bumped from the rebate program in recent years because of Social Security cost-of-living adjustments. Some 300,000 people got rebates last year, versus 490,000 in 1987.
The proposal would eliminate 50 percent of an individual's Social Security payments from being considered as income so many more can qualify for the annual rebates starting next year.
In addition, the proposal would increase the size of the average rebate from $267 to $367. Rebates can go up to a maximum $500, depending upon income and the taxes or rent paid.
GOP leaders propose to transfer funding for the shared-ride and mass transit programs funded by the Lottery to the taxpayer-supported General Fund. The shared-ride program is popular in rural areas and provides trips to doctors offices, etc. GOP lawmakers say the transfer will free up funding for the expansion of the rebate program, but proposals in previous years to transfer Lottery programs to the General Fund have met with opposition.
The Pennsylvania Lottery is considered "mature" in the sense that its period of fast growth is over and revenues have leveled off; the Lottery has taken in $1.6 billion in ticket sales each year during the past several years. When commissions to vendors and prizes are paid out, the Lottery is expected to have net revenues of $949 million this fiscal year to support its benefit programs for senior citizens.
