This week, New York governor Andrew Cuomo proposed a $1.66 billion property tax “circuit breaker” as part of his 2015-16 budget. The New York plan would provide a state tax credit to offset local property taxes when they exceed 6% of a family’s income. Homeowners with annual family income up to $250,000 and renters with annual family income up to $150,000 would be eligible for the credit. Once phased in over four years, the plan is projected to give 1.3 million New York households tax credits averaging $950.
While property taxes are higher in New York than in Pennsylvania, this is the sort of program PA could use to expand property tax relief.
Pennsylvania has had a similar program for years—the Property Tax/Rent Rebate program (PTRR)—but it is much more limited. PTRR provides checks to seniors with annual incomes up to $35,000 if they are homeowners and up to $15,000 if they are renters. The latest figures from the Department of Revenue indicate that more than 560,000 rebates have been issued at a cost of $270 million.
Adopting a New York-style program in Pennsylvania would expand property tax relief in several important ways. First, it would provide credits to working-aged families that currently are shut out of the PTRR program. Second, it would greatly expand the reach of the program. New York’s income eligibility levels are almost 10x as high as PTRR’s. Finally, it would focus on those taxpayers most in need of property tax relief. By setting a target percentage after which the credit kicks in, the program would give those families paying the highest rates relative to their income the most relief.
As we identified in our 2014 report, property taxes are high in certain places and for certain types of households in Pennsylvania. Offering targeted, means-tested relief here, as has been proposed in New York, would provide assistance to those families with the most need. Such a program could be part of an overall plan to correct our state’s chronic financial problems and achieve much-needed tax fairness.