HARRISBURG -- Retirees and middle-income homeowners would be among the winners in a tax-shifting proposal paid in part from gambling revenues if slot machines are legalized, a new study says.
Most renters lose because they would pay the proposed 0.1 percent local earned income tax and would not get a property tax rebate, according to the study released Monday by IssuesPA, a research group affiliated with the Pennsylvania Economy League.
To qualify for gambling revenue, school districts would have to approve the local income tax under a plan pushed by Gov. Ed Rendell and approved by the House in July.
The study's release comes as slots proponents are pushing for a Senate vote. While prospects for a vote today appear dim, Rendell continues to push for passage before the April 27 primary, but the Senate will be in session for just three days before then.
A lack of agreement on a distribution formula for providing property tax rebates with gambling revenue is holding up the vote. Some senators insist a formula should be voted on at the same time the Senate considers the gambling expansion -- not later.
The current plan calls for legalizing slots at eight racetracks, four stand-alone parlors -- including one in Pittsburgh -- and limited licenses at two resorts, one of them likely at Nemacolin Woodlands in Fayette County.
Supporters say the plan would provide $1 billion in new gambling revenue for property tax rebates each year.
An earlier IssuesPA study assailed that estimate, and the group says the long-term picture is full of questions. Will slots lose their novelty after a few years⢠Will gambling competition from other states reduce Pennsylvania's take⢠Would a downturn in the economy affect gambling revenues?
"Those questions aren't answered in the legislation right now," said LeAnne Rogers, policy analyst for the league.
The study, based on a conservative figure of $600 million in annual gambling revenue, projects that a homeowner in the Duquesne City School District, with a family of four living on an annual household income of $40,000, would save $229 annually under the tax-shifting proposal. The net tax reduction takes into account the property tax rebate and the amount paid in local earned income tax, Rogers said.
A renter with the same size family and household income in the Fox Chapel Area School District -- which encompasses Fox Chapel, Aspinwall, O'Hara, Sharpsburg, Blawnox and Indiana Township -- would pay $32 more annually based on the study.
Rendell declined to comment on the study.
"Gov. Rendell remains optimistic that a bill lowering property taxes, funded by the legalization of gaming in the commonwealth, can reach his desk for signature by the April 27th primary," said his spokeswoman, Kate Philips. "This is a reasonable and achievable goal, and the governor sees no reason for further delay."
The distribution formula for rebates used in the study is based on factors such as personal income, market value of property, local tax burden and school district populations.
The plan used by IssuesPA for its study might not be the final version to be considered by the General Assembly, Rogers said. IssuesPA analysts believe, however, that many of the concepts will be part of a final plan.
The proposal would not provide money for new school programs or reduce the disparity between poor and wealthy school districts, Rogers said.
