Tax relief program still confusing; homeowners told to be patient

The new Act 72 property tax relief application process has confounded Fayette County land owners for the second time in as many months -- this time because paperwork crossed during mail delivery.

Many of the residents who applied for the "homestead/farmstead" exemption have not yet received a response, said Jim Hercik, the county's chief assessor, and are now getting the second mailing of applications from school districts.

"There seems to be a cross-over period," Hercik said. "I understand their concern, but we are asking residents to be patient."

Residents who have applied and who have not yet received a response, should not apply again. Under the law, school districts were forced to send the application twice -- the initial package was mailed prior to Oct. 18 and the follow-up by Dec. 31.

The notification explains the homestead/farmstead property tax relief that may happen as a result of Pennsylvania's new gaming taxes. The package includes instructions, an application and the deadline -- March 1. To get consideration for the homestead/farmstead exclusion, a homeowner must simply reside at the property being taxed.

The tax assessment office was still processing the first wave of responses when the mandated second mailing was sent. No extra money was earmarked to provide additional staff for processing the applications, which came at a busy time of year for the tax office.

The office is almost finished sending response cards that let residents know whether they were accepted for the homestead/farmstead tax relief program. About 30,000 to 35,000 applicants are in the system at this point, Hercik said. Almost 4,000 are left. County school districts mailed about 60,000 applications.

"Right now we're fairly close to having them all in," he said.

Confused homeowners have inundated the tax office with calls since the second mailing, according to Kim Swink, department administrator.

"Some property owners have just fallen into that place where they are in the system, but haven't received a response yet," she said. "It is a very confusing process for everyone."

Residents who completed and sent both applications will be put through the system just like other applicants.

"It doesn't matter if someone sent us two applications," Swink said. "It's not a problem. When we scan them in, we'll find out."

In December, after the first mailing, the tax office received innumerable calls from property owners asking what to do next. In response, the tax office added a notification with the response cards stating that no further action is needed.

"Their part is done," Swink said.

Even if a resident is accepted to the tax relief program, they may not see it happen. To get a share of the state's gambling revenue through Act 72, school districts will have to raise earned income taxes by .1 percent before May 30.

Neither the increased income tax nor the property tax reduction will take effect until the state racks up $900 million in revenue from gambling taxes -- $500 million for distribution and $400 million in reserve.

"Nobody will see any results until 2007, if at all," Hercik said. "It's a hurry-up-and-wait situation. That's the shame of it. Legislators touted this as a big achievement, but it's a long time coming."

With $500 million available for distribution, homeowners within the Connellsville Area School District would see a 29.06 percent reduction in property taxes, which amounts to a savings of $140. With the fund at the full $1 billion, CASD property owners would see a 50 percent reduction, or savings of $240.

Each of the 501 school districts in Pennsylvania that adopt the measure will receive a share of the gambling money based on a formula called Property Tax Reduction Allocations, which will vary from year to year depending on gaming tax revenue. With the fund at $500 million, CASD would receive $1,229,076. At $1 billion, the district would get $2,405,397.

The homestead/farmstead exclusion is not delivered as a rebate or as a reduction in the district's tax rate. The exclusion will show up on homeowners' tax bills as a separate line item under the assessed value of the property. The exclusion will be subtracted from the original value to produce a new net assessment. When the district's millage or tax rate is applied to the reduced property value, lower property taxes will result.

An appeal process is in place for residents who are denied. Call the Fayette County Tax Assessment Office at 724-430-1350 within 40 days of receiving the response card to request an appeal form.

Visit the Property Tax Relief section of the Pennsylvania Department of Education's Web site, www.pde.state.pa.us, for more information.