The big news from Harrisburg this week is that Pennsylvania has a 2015-16 budget – almost nine months after it was due. Governor Tom Wolf allowed the final spending plan to be enacted into law without his signature, complaining that the budget used gimmicks to appear to be balanced. He chose not to veto it, however, stating that he did not want to allow schools to be shut down or other essential functions of government, such as corrections, to have funding jeopardized. The Governor did warn it is his belief that enacting a budget in this manner will make achieving a spending plan for 2016-17 more difficult, emphasizing that program cuts and revenue increases were inevitable. Most members of the General Assembly chose to simply express relief the budget impasse was over and funds will be released to public schools, colleges, universities, and agricultural services.
House Aging and Older Adult Services Committee Continues Series of Informational Hearings on Issues Impacting Older Pennsylvanians
Over the past two weeks the House Aging and Older Adult Services Committee has held two hearings on issues that impact older Pennsylvanians. The first hearing discussed programs to assist older Pennsylvanians to afford local and school property taxes. A number of school districts in Pennsylvania have offered volunteer opportunities to seniors who reside in their districts in exchange for a reduction in their property taxes. Legislation has been offered in the State House, HB 791, that would clarify the how these programs operate. A typical property tax exchange program allows seniors who volunteer in the schools for a set number of hours up to a $500 reduction in their property taxes.
AARP Pennsylvania had the opportunity to testify at this hearing to discuss how property tax reduction programs in Pennsylvania compare with similar programs in other states. We discussed three different types of programs – Homestead Exemption Programs, which reduce the amount of assessed property that is subject to taxation; Circuit Breaker Programs, which offer reductions in property taxes to homeowners and renters when property taxes exceed a certain percentage of the homeowner or renters’ income; and Property Tax Deferral Programs, which allow older homeowners to postpone the payment of a portion of their property taxes until the home is sold or until the owners’ death. Pennsylvania’s Property Tax and Rent Rebate program is a type of Circuit Breaker Program, offering property tax rebates of up to $850 to older homeowners based on their income. Eligibility for the rebate is for homeowners with incomes up the $35,000, with half of their Social Security income excluded from that total. Some Pennsylvania counties also offer Property Tax Deferral Programs.
Pennsylvania’s programs fall roughly in the middle of programs offered in other states – more generous than some, but not as generous as others. This is similar to Pennsylvania’s ranking in the overall property tax burden, where the Commonwealth falls somewhere between 10 th and 15 th in the nation.
Two other facts were pointed out during the hearing – the property tax burden is not evenly distributed within Pennsylvania. Some counties pay a much higher percentage of overall income in property taxes than others. In addition, it was noted that unlike many other states, Pennsylvania does not impose taxes on retirement income from pensions or Social Security.
The second hearing discussed the overall financial health of the Pennsylvania lottery and the impact of coming demographical changes on the programs supported by the lottery. Lottery revenues support programs that benefit older Pennsylvanians, but Matthew Knittel, Director of the Independent Fiscal Office (IFO) discussed how the aging of Pennsylvania’s population over the next few years will impact lottery programs – the IFOs presentation can be viewed here.
Drew Svitko, Director of the Pennsylvania Lottery, then discussed how the lottery is trying to address this challenge through the creation of new games and changes to the Powerball game that have resulted in higher jackpots and more ticket sales. Finally, the directors of the county Area Agencies on Aging from Blair, Bucks, and Crawford Counties testified about the services that Area Agencies on Aging provide utilizing lottery funds. Their comments focused on transportation and older adult protective services.
The IFO’s statistics present a sobering reminder of the challenges Pennsylvania faces as its population ages. But the discussion of the lottery program offered a hopeful reminder – Pennsylvania is the only state in the nation with a dedicated source of funding for programs benefitting older citizens. The importance of that funding and these programs will only grow over the coming years.
“Ray’s Round Up” features updates on current state and federal issues by Ray Landis, AARP PA’s Advocacy Manager.