Pennsylvania Property Tax Hike Over Pension Fund? AARP Bulletin
Pennsylvania Property Tax Hike Over Pension Fund? - AARP Bulletin
Property Taxes Databank.
Here's one more after-shock from the stock market crash: A crisis in Pennsylvania's pension fund is likely to cause hefty property tax increases.
The took a big hit in the crash, its assets plunging 26 percent last year to $43.2 billion. School districts and the state have to make up a $15 billion liability so that retired teachers and other school employees will get their full pensions, as required by law.
Homeowners may wind up shouldering the burden. Property taxes vary district to district, but the average tax bill will jump at least $200 to $300 by 2013, said the .
Everyone dreads higher taxes, but for older people it is especially upsetting.
"When you are talking about the average senior who is on a fixed income and did not get a Social Security increase this year, how can they afford higher taxes and still be able to afford their homes?" said Ray Landis, advocacy manager. Loretta Wible, 65, and her husband, Vince Ramsey, 56, don't know whether they can afford higher tax bills.
The couple thought they were all set for retirement when they paid off the mortgage on their two-bedroom ranch house in Pittsburgh eight years ago. They pay $1,400 in property taxes a year—slightly higher than the average bill of $1,247 in Pennsylvania, which has the nation's 19th highest property taxes.
But every year they find it harder to make ends meet, trying to live on her $1,300 a month Social Security, his $750 a month Supplemental Security Income and modest investments.
"Everything has gone up—food, medications, gas," said Ramsey, who has heart problems and diabetes. "I can't afford for taxes to go up."
They don't begrudge the pension to teachers. But they don't know where else to scrimp, having already cut small luxuries like going out to lunch occasionally. "What are people supposed to do to live?" Wible said.
The retirement system is funded by money from school districts and the state, investment income, and contributions from employees. It is a "defined benefit," which promises a specific regular payment for life.
Tim Allwein, assistant executive director for government and member relations of PSBA, said he believes taxpayers, many with diminished 401(k) plans or no pensions, are paying too much for this state-run pension. But Wythe Keever, assistant communications director for the , said the crisis was exacerbated because employers' contributions were kept artificially low from 2001 to 2003 after the dot-com bust. "They basically kicked the can down the road," he said. Now it's time to pay up. The only way to prevent big property tax increases would be a new statewide source of funding to supplement property tax revenue.
"It could be a statewide sales tax or a personal income tax. Property taxes are regressive," said AARP's Landis. "We can't look at 501 school districts coming up with 501 ways to do this."
Landis said any proposals to close the pension gap should protect the state's , which gives some older homeowners property tax rebates of $250 to $975. Landis said many struggling seniors already exceed the $35,000 income limit for the rebate.
"These property taxes are hurting seniors' ability to stay in the houses where they raised their family," he said.
AARP Pennsylvania plans to educate its members on the tax platforms of the two gubernatorial candidates, and , so people can cast an informed vote in November.
Cristina Rouvalis is a freelance writer based in Pittsburgh. Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures
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Pension fund crisis could force bigger property tax bills
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Property Tax Revolt.Property Taxes Databank.
Here's one more after-shock from the stock market crash: A crisis in Pennsylvania's pension fund is likely to cause hefty property tax increases.
The took a big hit in the crash, its assets plunging 26 percent last year to $43.2 billion. School districts and the state have to make up a $15 billion liability so that retired teachers and other school employees will get their full pensions, as required by law.
Homeowners may wind up shouldering the burden. Property taxes vary district to district, but the average tax bill will jump at least $200 to $300 by 2013, said the .
Everyone dreads higher taxes, but for older people it is especially upsetting.
"When you are talking about the average senior who is on a fixed income and did not get a Social Security increase this year, how can they afford higher taxes and still be able to afford their homes?" said Ray Landis, advocacy manager. Loretta Wible, 65, and her husband, Vince Ramsey, 56, don't know whether they can afford higher tax bills.
The couple thought they were all set for retirement when they paid off the mortgage on their two-bedroom ranch house in Pittsburgh eight years ago. They pay $1,400 in property taxes a year—slightly higher than the average bill of $1,247 in Pennsylvania, which has the nation's 19th highest property taxes.
But every year they find it harder to make ends meet, trying to live on her $1,300 a month Social Security, his $750 a month Supplemental Security Income and modest investments.
"Everything has gone up—food, medications, gas," said Ramsey, who has heart problems and diabetes. "I can't afford for taxes to go up."
They don't begrudge the pension to teachers. But they don't know where else to scrimp, having already cut small luxuries like going out to lunch occasionally. "What are people supposed to do to live?" Wible said.
The retirement system is funded by money from school districts and the state, investment income, and contributions from employees. It is a "defined benefit," which promises a specific regular payment for life.
Tim Allwein, assistant executive director for government and member relations of PSBA, said he believes taxpayers, many with diminished 401(k) plans or no pensions, are paying too much for this state-run pension. But Wythe Keever, assistant communications director for the , said the crisis was exacerbated because employers' contributions were kept artificially low from 2001 to 2003 after the dot-com bust. "They basically kicked the can down the road," he said. Now it's time to pay up. The only way to prevent big property tax increases would be a new statewide source of funding to supplement property tax revenue.
"It could be a statewide sales tax or a personal income tax. Property taxes are regressive," said AARP's Landis. "We can't look at 501 school districts coming up with 501 ways to do this."
Landis said any proposals to close the pension gap should protect the state's , which gives some older homeowners property tax rebates of $250 to $975. Landis said many struggling seniors already exceed the $35,000 income limit for the rebate.
"These property taxes are hurting seniors' ability to stay in the houses where they raised their family," he said.
AARP Pennsylvania plans to educate its members on the tax platforms of the two gubernatorial candidates, and , so people can cast an informed vote in November.
Cristina Rouvalis is a freelance writer based in Pittsburgh. Cancel You are leaving AARP.org and going to the website of our trusted provider. The provider’s terms, conditions and policies apply. Please return to AARP.org to learn more about other benefits. Your email address is now confirmed. You'll start receiving the latest news, benefits, events, and programs related to AARP's mission to empower people to choose how they live as they age. You can also by updating your account at anytime. You will be asked to register or log in. Cancel Offer Details Disclosures