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Homeowner Help for Property Tax Relief - County-by-County Resources

Auditor General Jack Wagner: Potentially Hundreds of Thousands Of Pennsylvanians Missing Out on Property Tax Relief from Slots

Fractured, confusing application process discouraging homeowner participation

HARRISBURG, Pa., Feb. 23, 2010 – Potentially hundreds of thousands of Pennsylvania homeowners are not receiving the tax relief from slots casinos revenue because the state has created a complicated, fragmented and cumbersome application process that discourages participation, according to a special report issued today by Auditor General Jack Wagner.

Wagner said that the state should designate a single agency, preferably the Department of Revenue, to administer the program. He also called on the General Assembly and Gov. Rendell to push back this year’s application deadline from March 1 to April 15, to give property owners more time to learn about the program and apply for tax relief.

“What we have here is a failure of the state government to communicate,” Wagner said. “The property tax relief promised to Pennsylvania homeowners has to be more about homeowner help and less hype, and state government must take the lead in that effort.”

Wagner’s auditors also found that state officials have overstated the amount of casino revenue being disbursed for property tax relief. They found that the state has thus far returned about $1.7 billion in slots revenues to taxpayers – one-fifth less than the $2.1 billion touted by the state.

“It is unacceptable for the government to exaggerate a program by 20 percent to make it sound better than it is,” Wagner said.

The General Assembly, at Gov. Rendell’s urging, legalized slots casino gambling in 2004 in order to reduce property taxes, create jobs, and revitalize the commonwealth’s horse-racing industry. Twelve of the 14 possible slots casino licenses were awarded by January 2010, and nine of those 12 casinos were open and operating.

According to state law, 55 percent of casinos’ revenues are to be returned to the state, with 34 percent of the commonwealth’s share earmarked for property tax relief, 12 percent for the Pennsylvania Race Horse Development Fund, 5 percent to the Economic Development and Tourism Fund, and 4 percent to local and county governments.

Gaming revenues fund two types of property tax relief: open eligibility, for homeowners of all ages and incomes, and restricted eligibility, for low-income homeowners, mostly senior citizens.

But as Wagner’s 62-page special report – the result of a one-year review of public documents and newspaper accounts, and the Taxpayer Relief Act, as well as interviews conducted by experienced performance auditors – noted, many property owners are not even aware that they are eligible for tax relief.

It is impossible to estimate precisely how many eligible Pennsylvania homeowners have not received the property-tax relief to which they are entitled because of the fractured system, Wagner said. What is known is that, based on a review of information provided by 49 counties, at least one million of three million residential properties in those 49 counties had not received any tax reduction through January 2010. Not every one of these properties would have been eligible for tax relief because they may have been the owner’s second home or a rental property. However, if only 10 percent of those million properties were primary residences eligible for tax relief, it would mean at least 100,000 Pennsylvanians have missed out on rebates they were promised, Wagner said.

“The state said repeatedly that every homeowner will get relief, and for that reason everyone should get it,” Wagner said.

Wagner’s report cited many reasons for why Pennsylvania homeowners are missing out on property tax relief. The primary reason is that relief is not automatic; homeowners must apply for it.

But auditors also found that some homeowners never received applications and some homeowners who did were confused by the one-page applications. The principal cause of confusion was the use of the antiquated words “homestead’’ and “farmstead,’’ which erroneously led some homeowners to conclude that they weren’t eligible. Wagner suggested that the language be changed in all property tax applications and literature to be more easily understood by homeowners to terms such as owner occupied or primary residency.

One married couple told Wagner’s auditors that they received an application in the mail, but threw it away when they saw “homestead” and “farmstead” and “all the fine print” in the instructions.

Another taxpayer said, “Leave it to the government to make something hard to understand.”

Some eligible homeowners said they did not apply because they thought there were income thresholds for eligibility. All Pennsylvania homeowners are eligible for property tax relief, Wagner said. The reduction is the same for every property owner in a particular school district, regardless of the assessed value of the property.

“The misperceptions about income point to a need for applications to state clearly and prominently that tax relief is available, regardless of income, age, size of home or value of home,” Wagner said.

Wagner’s auditors determined that slots casinos have generated more than $3 billion in new tax revenue for the commonwealth. But while state officials have touted that two-thirds of that revenue, or $2.1 billion, has been made available for property tax relief, that has not been the case. Wagner’s auditors found that only $1.7 billion has been disbursed in gaming revenues.

Wagner’s report noted that another point of confusion for taxpayers was the fact that property tax relief does not come in the form of a check. Instead, it comes in the form of a tax bill reduction and taxpayers have to look for evidence on their school property tax bill under the terminology of homestead or farmstead exclusion. The report also noted that in Philadelphia, gaming revenues reduce wage taxes, not property taxes. Philadelphia residents do not have to apply for this relief because the relief occurs by an automatic reduction to wage taxes for every working taxpayer.

Adding to the confusion was the fact that the state’s property tax relief Web site provides inadequate information. For example, Wagner’s auditors found that the state’s site includes neither an application nor a link to one and no information about eligibility requirements or even how to apply for property tax relief.

The average property tax rebate was $189 last year, Wagner said.

The Department of the Auditor General has created a “how-to” section on its Web page, www.auditorgen.state.pa.us, to help Pennsylvania homeowners seeking property tax relief, including a checklist and link(s) to obtain the application for property tax relief. Confused homeowners may also contact the department’s Taxpayer Advocate toll-free at 1 800 922-8477 for information on how to apply for property tax relief.

“It is absolutely crucial to have a single state agency, such as the Department of Revenue, to be responsible for making sure that this program operates as it was intended by the Taxpayer Relief Act and the gaming act. For the sake of Pennsylvania taxpayers, state government must improve its oversight, communications and administration of this vitally important program, so that financially strapped homeowners get the financial relief they were promised by slots casino gambling,” Wagner said.

 

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the Commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts more than 5,000 audits per year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s Web site at www.auditorgen.state.pa.us

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