ASD board considers options before deciding if it will take gaming funds
A homeowner in the Armstrong School District making a little more than $50,000 a year could end up paying more taxes if the school board decides to take slots revenues from the state.
In a presentation to the board Monday night, Greg Ewing, a consultant with the investment firm Parker-Hunter, told the board that it would need to raise earned income taxes by 1 percent to meet state requirements for property tax relief under the slot machine gambling law.
Ewing said most households making more than $50,000 would see their property tax reductions completely offset by the increase in the earned income tax, which is required to be implemented to be eligible for slots money.
The presentation was commissioned by the board earlier this year as it attempts to get a better handle on the law before deciding whether to accept slots revenues.
"The decision to opt in or out of this is solely on the board," Ewing said.
Based on a state formula, Armstrong School District would be required to give $530 in property tax relief if it accepts slots revenue, but would also be forced to implement a 1 percent increase in earned income tax in order to replace the lost revenue in its budget.
But all of that could be a moot point if gamblers don't play enough at the slots, Ewing said.
The state wouldn't hand out any money if it doesn't reach it goal of $900 million for property tax relief, he said.
"Until they hit that level, no money gets handed out," Ewing said.
However, he said that a school district that agrees to accept slots revenue still must increase the income tax even if the slots money doesn't arrive on schedule.
Under that scenario, the district would collect property taxes in full, without slots revenue relief, plus the income tax revenue, just to fill the hole in its budget, said Dale Kirsch, the district's business manager.
"For the district it will be revenue neutral," he said, "but for the taxpayers, it will seem like you raised their taxes."
Ewing said that in order for the district to generate the maximum allowable relief for homeowners, the earned income tax would have to raised to 3 percent -- or 2.5 percentage points higher than it is now.
But to give the maximum allowable relief -- a little more than $1,000 -- most households earning more than $35,000 would fail to break even, he said.
The calculations do not take into account whether the district would be forced to raise millage in any given year, further lessening the actual tax relief.
Ewing stressed to the board that some of the numbers used in his calculations were based on estimates given by the state or by Kirsch, and may change once the county's assessment office updates some of the figures in the spring.
He also said property tax relief could actually be higher if residents who are eligible for tax relief do not fill out applications for relief.
Kirsch said only about half of the state-estimated 14,000 eligible homesteads have actually returned the forms, which are due by March 1.
"A lot of this is fluid," Ewing said. "We're not certain how much gambling money will come in and how many people will apply for homestead exemptions."
He stopped short of offering a recommendation to the board as to whether to opt in or not.
"The school board has an important decision as they move forward," he said.