Pa. Wagers on Slot Machines To Pay for Property-Tax Relief

By Catherine Gewertz — July 14, 2004 2 min read

Pennsylvania Gov. Edward G. Rendell has signed legislation that allows slot machines in the Keystone State, a move that will help him fulfill two promises: increase the state’s share of education funding, and lower homeowners’ soaring property taxes.

One bill signed by the Democratic governor this month allows up to 61,000 slot machines at racetracks and other venues. The annual revenue from the slot machines is projected at $1 billion and will be used to pay for a companion bill that reduces property taxes by an average of 20 percent, or $300, per homeowner.

Both measures were signed July 5, the day after Gov. Rendell signed the fiscal 2005 state budget. The $23 billion spending plan increases precollegiate spending to $7.9 billion, an increase of about 8 percent over the fiscal 2004 amount. (“School Aid Remains Rendell’s Big Challenge,” Jan. 14, 2004.)

The new laws shift a greater burden of school funding from school districts to the state by effectively substituting gambling revenue for some of the property-tax money that forms the bulk of school budgets.

The property-tax law for the first time gives Pennsylvania voters control over local school budgets. When a district accepts the gambling revenue in order to receive the property-tax cut, its voters must be allowed to decide whether the district can raise property taxes above an inflation-based cap established by the law.

In a Bind?

Some Pennsylvanians contend that giving homeowners some control over property taxes and school budgets is long overdue, and will result in better-crafted spending plans that truly justify the tax increases the school districts seek.

But others fear that the state’s voters—70 percent of whom have no children in public schools—will reject most property-tax hikes, putting districts in a bind as they grapple with rising costs such as medical- insurance premiums.

“School districts are being penalized for increasing costs over which they have no control,” said Timothy M. Allwein, an assistant executive director of the Pennsylvania School Boards Association.

Donna Cooper, Gov. Rendell’s policy director, said that the new laws, combined with new education spending, are projected to boost the state’s share of school spending from about one-third to 44 percent by 2006, when the full effect of the initiatives is anticipated.

That shift, combined with the funneling of more aid to the poorest districts, is chipping away at funding disparities among the state’s 501 districts, Ms. Cooper said.

“We’re beginning to push the bottom up,” she said.

Ronald R. Cowell, the president of the Education Policy Leadership Center in Harrisburg, Pa., said the state still needs a comprehensive formula to replace the patchwork of criteria it uses to finance schools, and to address disparities that enable some districts to spend nearly three times what others spend on each pupil.

“We’re making some progress, but it surely will not cure our equity problem,” he said.

A version of this article appeared in the July 14, 2004 edition of Education Week as Pa. Wagers on Slot Machines To Pay for Property-Tax Relief