Pa. slots to shave millions off taxes The average property-tax reduction in the Phila. suburbs will be $254.

Posted: May 02, 2008

Gamblers busily pulling the levers in Pennsylvania's slot machine parlors have indirectly contributed $613 million to the state, money that will go to property-tax relief for most homeowners and to lower the wage tax in Philadelphia, according to figures released yesterday.

The money comes as a result of Act 1, passed in 2006, which gave the state a portion of the gaming revenues from slots to use for tax relief. Seven slots venues are now open, with the first opening 18 months ago; seven more are slated to open.

Homeowners in the Philadelphia suburbs will receive a total of $139.2 million in property-tax relief, according to figures released yesterday by the state Education Department. The money will not be sent to the taxpayers, but will come in the form of a reduction in their 2008-09 tax bill.

The average property-tax reduction in the Philadelphia suburbs will be $254, with amounts ranging from $623 in Chester Upland in Delaware County to $75 in Upper Merion in Montgomery County.

The formula for determining how much each district gets is based on property-tax values and on how highly taxed residents are in relation to their income.

Philadelphia will get $86.5 million in wage-tax relief that will lower the wage tax for residents from 4.169 percent to 3.93 percent; nonresidents will see their tax drop from 3.685 percent to 3.5 percent in 2009.

As more slots venues come on line, more revenue will come in and the amount of tax relief will continue to climb, said Education Department spokesman Michael Race.

When Act 1 passed, officials estimated that eventually, more than $1 billion would be available for property-tax relief. Pennsylvania Budget Secretary Michael Masch said in a news release last month that the state's share of the revenues was expected to increase by about $270 million during the next five years.

"It's difficult to say how much will come in next year or the year after," Race said, "but the money will continue in perpetuity."

In addition to the $613 million in statewide school property-tax relief, another $48.5 million in gaming revenues collected from slots earnings will go to a targeted senior citizen property-tax and rent-rebate program.

Also, 37 suburban Philadelphia school districts will get an additional $17 million to make up for wage taxes their residents pay in Philadelphia. State law exempts those residents from paying local wage taxes. That money, which ranges from $1.5 million in Bucks County's Council Rock School District to $11,551 in Chester County's Octorara district, must be used to reduce property taxes.

All homeowners in each school district get the same amount of property-tax relief, regardless of how much they pay in property taxes. To get the money, they must have signed up to receive it. Each year, those who haven't signed up already get a new chance to register and be included. Sign-up information is available from local school districts.

"Our taxpayers will be happy for whatever relief they can get," said Lawrence Feinberg, a school board member in Delaware County's Haverford School District and an opponent of Act 1 because of the spending limitations the act also put on school districts.

"I would assume over time it may turn into something more substantive," he added.

For many taxpayers, the few hundred dollars they will get in property-tax relief will not put much of a dent in their overall tax bill.

In the Haverford district, for example, homeowners will get an estimated $163 property-tax reduction per household, while a home assessed at the district average of $146,900 paid $3,087 in taxes this year.

"Maybe we can put it together with the federal-tax rebate and we'll be able to fill our gas tanks for a couple of months," Feinberg said.

Contact staff writer Dan Hardy at 610-701-7638 or

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