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Thousands of older Pennsylvanians vulnerable to dropping property tax rebates because of legislative

September 22, 2022 | 5:00 AM

State lawmakers accredited a one-time bonus to this year’s rebates however repeatedly failed to address a deeper drawback: the program’s steady decline.

  • Charlotte Keith/Spotlight PA

Thousands of older Pennsylvanians vulnerable to dropping property tax rebates because of legislative

Daniel Fishel / For Spotlight PA

Fewer and fewer older Pennsylvanians are receiving property tax rebates from a popular state program as a result of lawmakers have not updated the earnings limits to qualify in over a decade.

Spotlight PA is an independent, nonpartisan newsroom powered by The Philadelphia Inquirer in partnership with PennLive/The Patriot-News, TribLIVE/Pittsburgh Tribune-Review, and WITF Public Media.

It’s a dialog Diana Raph dreads.

Every yr, Raph, a tax preparer within the Lehigh Valley, applies on behalf of dozens of her shoppers to a state program that helps older Pennsylvanians pay their hire and property taxes.

And yearly, she has to inform increasingly of them that they not qualify, although little about their monetary situation has modified.

“The hardest factor is making an attempt to say to somebody, ‘I’m really sorry, however you lost your rebate’,” Raph stated. “A lot of them get upset, because they’re banking on that.”

No one likes paying taxes, but local property taxes in Pennsylvania are particularly loathed. Still, the funds fund important neighborhood providers, like public colleges, which rely on property taxes more here than in most other states.

Critics contend the system is especially unfair to older residents on fastened incomes, who’re vulnerable to being forced out of their homes by rising prices and taxes. The state’s rebate program, paid for partly with proceeds from the state lottery, is meant to relieve a number of the pressure.

The program acquired a one-time, $140 million boost this year, paid for with federal pandemic assist. The move was praised by Republicans and Democrats alike as a method to assist older Pennsylvanians squeezed by the best charges of inflation in 4 a long time and hovering costs for groceries, gas, and other essentials.

But the one-off enhance glosses over a deeper problem that politicians have largely failed to mention: The number of individuals getting assist from this system retains shrinking and lawmakers in Harrisburg have dragged their heels on a long-term fix.

As a outcome, fewer and fewer people are really benefiting. The variety of rebates paid out has dropped by more than 25% over the past decade, according to the state Department of Revenue, which administers this system. That works out to 160,000 fewer households getting assist.

There is broad settlement that the main reason for the decline is that state lawmakers haven’t up to date the earnings limits for householders to qualify in additional than 15 years. For renters, it’s been greater than 35 years. As incomes have steadily increased over time, buoyed mostly by inflation, it has turn out to be tougher to qualify for a rebate.

Making issues worse, virtually everyone who gets a state rebate also receives Social Security benefits, which the federal government updates every year to keep up with inflation. The income limits for the state program, nevertheless, don’t account for this.

As a outcome, many individuals who have been receiving rebates for years discover that these small, routine bumps to their Social Security checks nudge their incomes over the restrict to qualify.

The stakes are particularly excessive this yr as a result of Social Security recipients got the best cost-of-living adjustment since 1982, which might disqualify scores of individuals at present receiving rebates when they reapply subsequent yr based mostly on their 2022 revenue.

The revenue limits for next 12 months must be raised, stated state Rep. Stan Saylor (R., York), the chair of the House Appropriations Committee, who won’t be returning to Harrisburg after shedding a major problem in May. “You’ve received to maintain up with the speed of inflation there or it’s not a worthwhile program,” he informed Spotlight PA.

Without motion from lawmakers, extra Pennsylvanians will discover themselves in the identical place as two longtime shoppers of Raph’s, a married couple in their 90s who obtained rebates for years. This year, for the primary time, an increase in their Social Security funds put them just some hundred dollars over the limit, Raph said.

That cost them the $250 state property tax rebate, as nicely as this year’s one-time bonus, roughly one other $175. Failing to qualify for the state rebate meant they weren’t eligible for a separate $250 rebate from their local college district both. The hire for his or her mobile house lot, meanwhile, retains growing, Raph mentioned.

A small measure of relief

The Property Tax/Rent Rebate program offers homeowners and renters who’re 65 or over, or disabled, a partial refund on rent or property taxes paid the earlier 12 months, so long as they meet the revenue necessities.

For owners, who make up roughly two-thirds of rebate recipients, the revenue cutoff is $35,000. The threshold for renters is far lower, at $15,000. (In both case, solely half of someone’s Social Security benefits is counted as income.)

Politicians often say this system helps some of the state’s most vulnerable residents maintain their properties. One recipient advised Spotlight PA that the rebate was “the difference between me consuming and never.”

For many people, however, the program features more as a small measure of aid than a lifeline. Last 12 months, about half of the households that certified for property tax rebates fell into the highest eligible earnings bracket, with most receiving the smallest rebate quantity of $250.

It’s these households on the cusp of qualifying that are most vulnerable to shedding out.

Failing to replace the program’s income limits “automatically disqualifies people who would in any other case qualify,” mentioned Mary Johnson, a policy analyst at The Senior Citizens League, a nationwide advocacy group.

One factor driving the declining variety of recipients is the automatic cost-of-living increases to Social Security benefits. These could be a blended blessing, Johnson mentioned.

Cost-of-living increases are granted solely when prices for everyday necessities have already gone up. And recipients don’t really see all the additional cash of their bank accounts. Rising Medicare premiums, which are routinely deducted from Social Security funds, eat up a lot of the enhance, Johnson mentioned. The extra money can even trigger people to lose different benefits, like meals stamps, typically costing them greater than the worth of the rise itself.

Commonwealth Media Services

State officials say Pennsylvania is the one state to dedicate all proceeds from its lottery to services for older adults.

A regular decline

Pennsylvania is the only state to dedicate all proceeds from its lottery to companies for older adults, state officials say. On billboards and posters across the state, the lottery’s familiar inexperienced emblem reminds passersby that it “Benefits Older Pennsylvanians. Every Day.”

From the beginning, lawmakers tied the push to create a state lottery to easing the property tax burden on older residents. In 1971, when the General Assembly was considering a lottery bill, the state senator pushing the plan informed The Philadelphia Inquirer that tying the lottery to a “worthwhile and popular” trigger would make it more profitable.

Another lawmaker, elevating moral objections to gambling, would later say it was incorrect to “lure the general public with the label, ‘aid to our senior citizens.’”

The yr after lawmakers agreed to create the state lottery, property tax rebates went out to greater than 265,000 households.

Over the subsequent 15 years, state lawmakers permitted a number of increases to the earnings limits and rebate quantities. Still, rising property taxes remained a perennial concern in Harrisburg.

In 2005, former Democratic Gov. Ed Rendell convened a particular legislative session to deal with the problem, however lawmakers struggled to agree on sweeping property tax cuts because of the painful tradeoffs involved, like elevating sales or revenue taxes.

“Everybody wants to go to heaven, no one desires to die,” former state Sen. John Wozniak, a Democrat representing Cambria County, quipped throughout a debate on the difficulty in early 2006. “The fairest taxes are the ones that the opposite man is paying and the ones that I am not paying.”

Finally, after months of negotiations, the legislature settled on a compromise: the biggest enlargement in the rebate program’s historical past. The agreement greater than doubled the income threshold for householders and upped rebates for the poorest households by $150.

Between 2006 and 2007, the number of households receiving rebates virtually doubled, according to the state Department of Revenue.

In 2010, that number peaked at simply over 600,000.

Then it began to shrink, a trend that has continued every year since. Last year, by comparison, fewer than 450,000 households obtained rebates. That’s a drop of almost 27%.

In 2014, lawmakers addressed the problem with a stopgap measure focused on Social Security cost-of-living increases, guaranteeing that no one who had already qualified for a rebate would lose out solely due to those raises. The bill, signed into regulation by former Republican Gov. Tom Corbett, allowed lots of of people to maintain receiving rebates, based on the Department of Revenue, but it expired in 2016 and wasn’t renewed.

State Sen. Michele Brooks (R., Crawford), who sponsored the bill that created the freeze when she was a state consultant, mentioned an replace is overdue. “We owe it to our seniors to keep them of their properties and within the communities they helped develop and develop,” mentioned Brooks, now the chair of the Senate Health & Human Services Committee.

Many lawmakers hear firsthand in regards to the program’s shortcomings: Their native workplaces play a vital position in promoting it and serving to individuals apply.

But previous efforts to increase the program, by each Republicans and Democrats, have gone nowhere. Over the past ten years, state legislators have introduced at least two dozen payments that might up the revenue limits, or reinstate the freeze on individuals losing their rebates due to Social Security increases, a Spotlight PA evaluation found. None were profitable.

If the income limits had been up to date, Tracy Berryman and her husband may need been able to get help. Berryman, 57, stated they are each retired and disabled, however their income is roughly $1,000 too excessive to qualify. They want to keep living of their house of 13 years, on the outskirts of Hollidaysburg, however Berryman worries that if recent local property tax will increase proceed, they won’t be capable of afford it.

“It’s either pay my property taxes, or do I not pay this invoice or that bill — it’s all the time something,” she said. Receiving a $250 rebate “would mean an awful lot.”

Today, about half of the funding for the rebate program comes from gaming revenues and half from the state lottery, according to the Department of Revenue.

Advocates for older Pennsylvanians say one cause lawmakers haven’t addressed the program’s decline is that for years, beneath governors from each parties, the state has relied on the lottery fund to assist cowl the rising value of some Medicaid programs.

Every 12 months since 2007, state lawmakers have accredited transfers of cash out of the lottery fund to help pay for long-term care for low-income older adults — virtually $5 billion, in whole. That features a $350 million transfer on this year’s budget.

State officials say the transferred lottery cash still goes toward services for older residents. But some advocates argue that other lottery-funded programs — just like the rebates — threat being short-changed and ought to be fully funded before any transfers are made.

“Instead of constructing exhausting selections ensuring there were enough revenues in the basic fund, they took a simple means out and transferred lottery funds,” stated Ray Landis, a former lobbyist for AARP Pennsylvania. The lottery, he added, was created to provide extra advantages to older Pennsylvaians — not to prop up the state price range.

A slender window to act

Time is working out for lawmakers to act earlier than a serious Social Security improve could put a rebate just out of attain for many people currently receiving one.

To hold pace with skyrocketing inflation, the federal Social Security Administration approved a 5.9% enhance in advantages for 2022 — the largest increase in virtually 40 years.

When Pennsylvanians apply for the rebate program next 12 months, based on this year’s revenue, state officers anticipate lots of people will no longer qualify.

“We need to make this alteration before the tip of the year,” said state Rep. Steve Samuelson (D., Northampton), the minority chair of the House Aging & Older Adult Services Committee, who has long advocated for increasing the earnings thresholds. “After 15 years, it’s long overdue.”

In the present legislative session, lawmakers have introduced at least six payments that may replace the income limits. Five have been referred to the state House Finance Committee. State Rep. Michael Peifer (R., Pike), who chairs the committee, did not respond to interview requests.

In a statement, a spokesperson for outgoing Gov. Tom Wolf stated the administration is “happy to have interaction in discussions” to replace the income thresholds for the program “to better replicate the current local weather within the commonwealth.”

A spokesperson for House Republicans mentioned this year’s one-time bonuses would “provide fast assistance to some of Pennsylvania’s most susceptible citizens as they battle to deal with the financial influence of Biden-led inflationary policies,” however did not respond to questions on why efforts to deal with the program’s dwindling numbers have stalled.

A spokesperson for Senate Republicans did not respond to questions from Spotlight PA. (Republicans maintain the bulk in both chambers of the state legislature.)

State Rep. Joe Ciresi (D., Montgomery), who has sponsored a invoice that may completely increase the program, said he hopes widespread support for the one-time increase smoothes the way for a broader fix. But it’s unlikely the legislature will get a lot carried out before the November elections, he added. And without a concerted push from lawmakers, who have just some session days left on the calendar after Election Day, the problem in all probability won’t be addressed earlier than Pennsylvanians start making use of for subsequent year’s rebates in January.

Attorney General Josh Shapiro, the Democratic nominee for governor, plans to significantly develop this system, raising the earnings thresholds to make an estimated 275,000 more Pennsylvanians eligible, and doubling the rebate quantities for so much of households. The enlargement would cost roughly $400 million, according to Shapiro’s marketing campaign, and would wish approval from the state legislature.

The Republican nominee, state Sen. Doug Mastriano of Franklin County, praised the one-time improve and has stated eliminating property taxes for all homeowners — something the General Assembly has balked at doing prior to now — shall be his top priority. In a radio interview in March, Mastriano mentioned he would massively cut spending on public training and provides the money to students immediately, to make use of on the college of their selection.

Unless one thing modifications, the rebate program will proceed to shrink. Next yr, roughly 11,000 fewer folks will obtain rebates than this 12 months, the Department of Revenue estimates.

Pat Leibensperger, who lives in Allentown, acquired a lease rebate for a number of years. Leibensperger, 91, said she typically put a few of the money toward birthday or Christmas items for her grandchildren.

She was shocked, then offended, several years in the past when she discovered she not qualified. As far as she can bear in mind, the only change to her income that yr was a Social Security cost-of-living improve.

Leibensperger said lawmakers ought to have up to date the earnings limits to account for the automated increases. “Our legislators did not observe via and make the required changes,” she mentioned. “They simply let it die.”

Spotlight PA’s Stephen Caruso contributed to this report.


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