"I'm cautiously optimistic we will have a bill ... that will be a giant step to property tax reform," Rendell told the annual gathering of the Pennsylvania State Association of Township Supervisors at Hershey Lodge.

Meanwhile in Harrisburg, efforts to forge a compromise between competing tax reforms plans in the state Senate and House stalled over how to pay for a property tax rebate program for seniors.

Lawmakers in the state Senate want to expand the program to allow 400,000 seniors earning up to $30,000 yearly to receive school property tax rebates. The cap currently is $15,000.

Paying for the expansion of the program could be problematic because the Senate plan would fund it through proceeds from 14 statewide slot parlors that haven't opened yet.

The state would have to use surplus funds in the Pennsylvania Lottery to pay for the program until the slots proceeds are available. If the lottery source dried up, the state might have to dip into the general fund until the gambling proceeds are available.

Until a plan to fund the rebate program is agreed upon, efforts to move a property tax reform bill through the Legislature are stalled -- again.

Senate Majority Leader David "Chip" Brightbill, a Lebanon County Republican who represents a portion of northwest Lancaster County, said negotiations between leaders of both parties and the governor to solve the funding problem will begin in earnest.

He does not want the state to dip into the general fund for the rebate program.

"We're going to try to do it in such a way the surplus lottery money will be enough," Brightbill said.

Landowners across the state pay about $6 billion in school property taxes. With many politicians, including Rendell, facing election-year challenges, pushing through a tax reduction program is a high priority.

"I would like to complete it promptly," said Brightbill, who faces tire wholesaler and government activist Mike Folmer in the May 16 GOP primary.

The Senate plan couples the senior rebate program with a voter referendum in spring 2007. Voters would decide whether to raise their earned income tax rate in exchange for reduced property taxes.

"It will be interesting to see how the voters react when they have the say," Brightbill said.

Rendell said he liked the Senate plan but added it wasn't "as much as I would like to see, but to achieve more we would have to raise another tax."

Rendell has been under fire from Republican gubernatorial candidate Lynn Swann, who has accused the Philadelphia Democrat of not delivering on 2002 election promises to deliver property tax relief.

Rendell's proposal to use more than a third of the proceeds from the 14 slot parlors to reduce property taxes is still on the table. Licenses for the parlors are expected to be handed out this year.

Rendell estimates the slots parlors would mean about $1 billion in property tax relief.

Senators and House members propose using the proceeds in their plans, but lawmakers are hedging their bets on how much money the slots parlors will generate.

A panel of six lawmakers, including Brightbill, is charged with drawing up a bill both chambers can vote on. If the Senate and House approve a plan, it goes to Rendell's desk for him to sign.

The panel will meet Wednesday.

Dave Pidgeon's e-mail address is dpidgeon@lnpnews.com. blog comments powered by Disqus