Spotlight PA is an independent, non-partisan newsroom powered by The Philadelphia Inquirer in partnership with PennLive/The Patriot-News, TribLIVE/Pittsburgh Tribune-Review, and WITF Public Media. Sign up for our free newsletters.HARRISBURG — For more than a decade, state lawmakers have sent yearly payments to Pennsylvania’s school districts so they can lower residents’ property tax bills.
These payments are funded by gambling revenue, which has taken a major hit this year as the coronavirus forced casinos to shut down for months before reopening under new restrictions.
Gov. Tom Wolf’s administration and Republicans who control the legislature thought they had a solution to make up for the shortfall: State lawmakers this spring approved a plan to use up to $300 million in federal coronavirus dollars toward the promised $621 million in relief.
But in mid-September, the federal government rejected Pennsylvania’s plan, Spotlight PA has learned. School districts are now waiting for the last $200 million, which was due in October, leaving them on the hook at a time when many are already struggling with large local revenue losses and cost increases for items like cyber charter school tuition.
“That is the challenge that folks are dealing with right now,” said Hannah Barrick, assistant executive director for the Pennsylvania Association of School Business Officials.
The amount of the tax break provided to each homeowner varies, but in the majority of school districts, each homeowner pays between $100 and $400 less in school property taxes each year. (In Philadelphia, the money is used for wage tax relief.)
School districts already passed budgets earlier this year and approved tax rates based on what they expected to receive from the state. The amount still owed varies, according to documents provided by the Wolf administration, including $27.7 million to Philadelphia treasurer’s office, $5 million to Pittsburgh Public Schools, $3.1 million to Allentown School District, and $2 million to Central Bucks School District in the Philadelphia suburbs.
“There’s not a lot that school districts can do at this point to adjust should those funds not come,” said Barrick.
Barrick said her organization is hopeful lawmakers will straighten out the issue soon as they face a Nov. 30 deadline to pass a budget for the remaining seven months of the fiscal year.
The legislature must also agree how to spend about $1.3 billion in remaining CARES Act money, which currently can only be used for costs related to the public health emergency — not to fill revenue shortfalls. If they fail, state law says that money will go to the 60 least-populated counties.
In May, as the state’s Independent Fiscal Office estimated that the state would lose nearly $5 billion in revenue through June 2021, lawmakers took the unusual step of passing a stopgap budget.
The nearly $25.8 billion spending plan fully funded most education spending so schools were able to reopen this fall. But it funded many other departments for only five months, leaving holes for Medicaid programs, prisons, state police, and a host of other services.
Republican leaders on Thursday noted that state revenue collections and projections are better than expected, and Sen. Pat Browne (R., Lehigh), chair of the Senate Appropriations Committee, credited that to “people in our communities that continue to work, notwithstanding very challenging times.”
Still, Democrats on the House Appropriations Committee are estimating a $2.9 billion budget gap for the rest of the fiscal year — although that is based on a revenue estimate that assumes lawmakers in Washington, D.C., will send more stimulus money, which is uncertain.
Making up the property tax relief shortfall has been part of discussions between the Wolf administration and the legislature, said Neal Lesher, a spokesperson for House Appropriations Committee Chair Stan Saylor (R., York).